Just when you think Goldman Sachs (GS) is down for the count, it wows the Street with its results, just like compatriots Citigroup (C) and JPMorgan Chase (JPM).
Bloomberg News Goldman Sachs reported a profit of $4.10 a share, beating forecasts for $3.05, on revenue of $9.1 billion, topping the Street consensus for $8 billion. Return-on-equity came in at 10.9% during the second quarter.
SunTrust Robinson Humphrey’s Eric Wasserstrom and Jeff Cantwell explain Goldman’s beat:
The upside reflected stronger revenues across all business lines, partially offset by higher expenses. In particular, Investment Banking results were up 15% YoY; trading results were -9%; and Investing and Lending revenue was up 46%, reflecting strong gains in private equity positions, and to a lesser extent, on debt holdings. The comp ratio was 43%, in line with our forecast, while the higher absolute level reflected the stronger revenue performance. Significantly, Goldman Sachs’ GAAP balance sheet declined by $56B to $860B, reflected a reduction in risk exposure, but RWAs were down only slightly to $590B; the CET1 ratio improved modestly to 11.4%. These results suggest upside to the consensus 2014 EPS of $15.23 (STRH $15.70).
Shares of Goldman Sachs have gained 1.1% to $168.92, while Citigroup has advanced 1.7% to $49.23 and JPMorgan Chase has jumped 3.9% to $58.49.
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