Goldman Sachs, COVID-19 Impact Leads to Earnings Surprise

Unlike Commercial Banks Bearing Large Losses, Stocks and Bonds Represent the COVID-19 'Special' Case

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] Goldman Sachs, a leading American investment bank, announced surprising earnings amid the COVID-19 pandemic. The increase in bond and stock trading driven by rising corporate funding demand is analyzed as the reason for the revenue growth.

On the 15th (local time), Goldman Sachs announced it achieved a profit of $2.42 billion in the second quarter. Earnings per share reached $6.26, far exceeding Wall Street’s estimate of $3.78. Second-quarter revenue was also $13.03 billion, about $3.3 billion more than the expected $9.7 billion.

This performance contrasted with major commercial banks, which saw their earnings plunge due to large-scale loan loss provisions the day before. CNBC reported that the gap between Goldman Sachs’ results and estimates like this has not occurred in 10 years.

Goldman Sachs’ strong earnings were attributed to the performance of its trading and investment banking divisions. As the zero interest rate era reopened amid the COVID-19 crisis, many companies sought funding through bond and new stock issuance and initial public offerings, expanding the bank’s revenue base.

David Solomon, CEO of Goldman Sachs, evaluated, "Our strong performance is due to a diversified revenue model." He also expressed confidence, saying, "Although the economic outlook is uncertain, clients restructuring their businesses will continue to seek us out."

After the earnings announcement, Goldman Sachs’ stock price showed a rise of over 6% in after-hours trading.