Investment Bank Goldman Sachs Posts Unexpected Surprise Earnings... "Trading and IB Revenue Soars"

Q2 Net Profit of 2.91 Trillion KRW
Outstanding Performance Among Wall Street Banks

[Asia Economy Reporter Naju-seok] The American investment bank Goldman Sachs recorded an earnings surprise amid the novel coronavirus disease (COVID-19) crisis. While most banks on Wall Street posted poor results due to the COVID-19 shock, Goldman Sachs achieved the second-best performance in its history.

According to the Wall Street Journal (WSJ) on the 15th (local time), Goldman Sachs posted a net profit of $2.42 billion (2.91 trillion KRW) in the second quarter of this year. This exceeded Wall Street's forecast ($1.12 billion) by more than double. Revenue also reached $13.3 billion, surpassing the market expectation of $9.8 billion.

[Image source=Reuters Yonhap News]

This stands out even more when compared to the results of other major Wall Street banks. JPMorgan Chase and Citibank's second-quarter net profits fell by 51% and 73%, respectively, compared to the same period last year. Even Wells Fargo recorded a net loss for the first time since 2008. These three banks set aside $28 billion in loan loss provisions to prepare for bad loans.

Goldman Sachs exceeded market expectations due to better-than-expected performance in bond and equity trading and the investment banking (IB) division. Bond trading increased by 150% from last year to $4.24 billion, and equity trading rose 46% to $2.94 billion. Investment banking division revenue also grew 35% year-on-year to $2.66 billion. Notably, unlike other banks, Goldman Sachs does not have mortgage or credit card-related business sectors, allowing it to avoid the direct impact of soaring unemployment rates and ultra-low interest rates. The increase in bond and equity trading amid volatile market conditions also contributed to Goldman Sachs' strong performance. The ongoing volatility was driven by aggressive stimulus measures from the U.S. government and the Federal Reserve (Fed), which underpinned the better-than-expected results.

David Solomon, CEO of Goldman Sachs, stated, "The volatility we have seen over the past few months has helped us fulfill the promises we made to our investors," adding, "Although the economic outlook remains uncertain, Goldman Sachs will continue to be the choice of investors worldwide."