Golden quarter for Goldman as volatility lifts revenues 93pc
GOLDMAN Sachs has emerged as the latest Wall Street bank to cash in on the coronavirus trading frenzy in the second quarter after revenues from trading shot up 93pc over the period.
The Wall Street banking giant saw its overall revenues rise 41pc compared to a year ago to $13.3bn (£10.6bn) a nearrecord as market volatility caused by coronavirus triggered a trading boom and beat market estimates.
The trading surge offset the lack of lucrative M&A deals, with the bank making a profit of $2.42bn in the quarter to July. Although the market expected trading to be strong, the sharp rise in revenues still caused surprise.
“Goldman’s earnings this quarter were too good – almost indecent,” said Octavio Marenzi, boss of consultancy Opimas. “This is likely to have political ramifications. The Fed has been able to engineer a huge bounce back in the markets by injecting trillions of dollars, benefiting investment banks primarily. This will lead to calls for the government to do more to help Main Street rather than Wall Street.”
The banking giant broke a number of its records over the quarter. Investment banking generated record quarterly revenues of $2.66bn, including record revenues in both equity and debt underwriting, while fixed income, currency and commodities (FICC) trading revenues of $4.24bn marked its best performance in nine years.
Chief executive David Solomon argued that turbulence from recent months “only reinforces” the commitment to his strategy.
The bank also put aside just under $1bn for legal costs over the quarter, likely to be saved for any charges related to the 1MDB corruption scandal.