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Goldman Sachs rides global dealmaking boom to smash profit estimates By Reuters

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© Reuters. FILE PHOTO: The Goldman Sachs company logo in New York, U.S., April 17, 2018. REUTERS/Brendan McDermid//File Photo

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By Noor Zainab Hussain and Matt Scuffham

(Reuters) – Goldman Sachs Group Inc (NYSE:) on Tuesday blew past analysts’ estimates for second-quarter profit as record global dealmaking activity helped Wall Street’s biggest investment bank offset a slowdown in trading.

Deals worth $1.5 trillion were announced in the three months to June 30 despite slowing activity among blank-check firms, more than any second quarter on record and up 13% from the record first quarter of the year, according to Refinitiv data.

Overall financial advisory revenue surged 83% at Goldman in the second quarter, while equity underwriting revenue jumped 18%.

Investment banking revenue rose 36% to $3.61 billion.

Goldman comfortably held on to its top ranking on the league tables for worldwide M&A advisory, according to Refinitiv. The league tables rank financial services firms on the amount of M&A fees they generate.

Total net revenue surged 16% to $15.39 billion, while diluted earnings per common share of $15.02 beat estimates of $10.24, according to the IBES estimate from Refinitiv.

Net revenue at the bank’s asset management division more than doubled to $5.1 billion, driven by higher revenues from equity investments.

Trading, however, was a sour spot. The global markets business, which now houses the trading business, reported a 32% fall in revenue.

Net revenue from fixed income, commodities and currencies (FICC) trading fell by 45% as the bank faced tougher comparatives due to heightened market volatility this time last year as the COVID-19 pandemic hit. Net revenues from equities trading fell 12%.

JPMorgan Chase & Co (NYSE:), the largest U.S. bank, also suffered from a well-flagged slowdown from last year’s record-breaking trading results.

Goldman released $92 million from its loan loss reserves in the second quarter, in a sign of the bank’s bets on sustained U.S. growth. The bank last year had set aside more funds to cover potential corporate loan losses due to the pandemic.

Meanwhile, revenue in its consumer banking business, a focus area for Chief Executive Officer David Solomon, rose 41% in the quarter, reflecting higher deposit and credit card balances.

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