Investing.com - Goldman Sachs (NYSE:GS) blew past consensus expectations with its earnings report for the second quarter Wednesday, posting a net profit some 60% above analysts' forecasts thanks to a massive windfall from its bond and equities trading operations.
Goldman announced earnings per share of $6.26 on revenue of $13.30 billion, the second-highest quarterly revenue it has ever posted. Analysts polled by Investing.com had anticipated EPS of only $3.9 on revenue of $9.7 billion. The potential for an upside surprise had been evident after two of Goldman's biggest rivals, JPMorgan (NYSE:JPM) and Citigroup (NYSE:C), both posted blowout quarters for fixed-income trading on Tuesday.
Goldman said its fixed-income division posted its best quarterly revenue in nine years at $4.24 billion, while equities trading generated $2.94 billion, the highest in 11 years. Group revenue was up 41% from a year earlier. However, earnings were lower because of a $945 million litigation cost.
Compared to JPMorgan and Citi, Goldman has a relatively small book of corporate loans at risk from the wave of bankruptcies caused by the pandemic. It still recorded provisions against possible loan losses of $1.59 billion, up from $214 million a year earlier and $937 million in the first quarter.
Traditional retail and commercial lenders are finding things tougher, however. Wells Fargo (NYSE:WFC) on Tuesday swung to its first quarterly loss in nearly a decade, thanks to over $8 billion of provisions.
On Wednesday, PNC Financial (NYSE:PNC) had reported it swung to an underlying net loss of $744 million after taking $2.7 billion in charges for actual or potential loan losses. The bank’s net interest margin also fell 32 basis points to 2.52% due to the Federal Reserve’s series of interest rate cuts at the start of the pandemic.
PNC’s bottom line looked a lot healthier due to a $4.4 billion gain on the sale of its stake in asset manager BlackRock (NYSE:BLK) during the quarter.
US Bancorp (NYSE:USB) likewise said its net profit fell some 62% on the year to $689 million owing to a $1.74 billion provision for bad loans. Charge-offs rose to $437 million.
Goldman Sachs follows mixed updates from JPMorgan, Citi
Goldman Sachs's report follows an earnings beat by JPMorgan on Tuesday, who reported EPS of $1.38 on revenue of $33.82 billion, compared to forecasts for EPS of $1.19 on revenue of $30.41 billion.
UnitedHealth had beaten expectations on Wednesday with second quarter EPS of $7.12 on revenue of $62.14B, compared to forecast for EPS of $5.18 on revenue of $63.34B.
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