Goldman Sachs cashes in on trading frenzy with revenue surge
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 and investment banking revenues hit a record.
The Wall Street banking giant's revenues rose 41pc to $13.3bn in the three months to June, compared with the same period last year, a near-record as market volatility caused by coronavirus triggered a trading boom and significantly beat market estimates.
Busy trading desks offset the lack of lucrative merger and takeover deals, helping the bank to a $2.4bn (£1.9bn) profit in the period.
Although the market expected trading to be strong, the sharp rise in revenues still caused surprise. Connor Campbell, a financial analyst at Spreadex, said the trading arm did so well that the unit alone beat forecasts by $2.5bn.
"Goldman's earnings this quarter were too good - almost indecent," said Octavio Marenzi at 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."
Goldman said it generated record quarterly investment banking revenues of $2.66bn, which included record quarterly revenues in both equity and debt underwriting, while fixed income, currency and commodities 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, funds likely to be saved for any charges related to the 1MDB corruption scandal that has put Goldman under scrutiny for years and involves a Picasso painting and a Leonardo Di Caprio film.
The bank reported its second quarter numbers a day after rival JP Morgan said it made $9.7bn from trading over the quarter, up 79pc on a year ago, while its investment banking revenues were up 91pc due to steeper fees.
