Goldman’s earnings blow past estimates as investment banking revenue boosted by strong IPO market

Goldman Sachs on Tuesday reported second-quarter earnings that blew past Wall Street expectations, propelled by strong performance in investment banking amid a robust IPO market.

Here are the numbers:

Earnings: $15.02 per share vs. $10.24 expected by analysts polled by Refinitiv. A year earlier Goldman recorded earnings per share of $6.26 (53 cents per share if accounted for costs related to the 1MDB settlement.)
Revenue: $15.39 billion vs. $12.17 billion expected

Shares of Goldman were flat in morning trading following the earnings release. The stock is already up 45% in 2021 as investors anticipated strong results amid the economic comeback from the pandemic.

Goldman’s investment banking segment posted its second-highest revenue quarter ever, behind the first quarter of 2021, as a booming IPO market boosted its equity underwriting.

Companies are rushing to go public this year to take advantage of a stock market at record highs. Capital raised via traditional IPOs in 2021 totaled a record-breaking $135 billion, far surpassing a five-year average of only $53 billion annually, according to FactSet.

Goldman’s net revenues from investment banking totaled $3.61 billion, ahead of FactSet’s consensus estimate of $3 billion. The backlog increased significantly from the end of 2020, ending the second quarter at a record level, the bank said.

Year to date, the New York-based bank ranked number one in mergers and acquisitions globally, worldwide equity and equity-related offerings, common stock offerings and initial public offerings.

Goldman’s trading businesses saw an expected slowdown as the boom from pandemic-induced volatility started to fade. Net revenues totaled $4.90 billion in the last quarter, compared with $7.58 billion in the first quarter of 2021. The sum was split between $2.23 billion in equities trading and $2.58 billion in fixed income. Both figures came in slightly above FactSet estimates.

Its asset management unit generated record revenues of $5.13 billion in the second quarter, boosted by record sales from equity investments.

Goldman also announced that its board approved a planned 60% increase in the quarterly dividend to $2 per share beginning in the third quarter.

JPMorgan Chase also reported second-quarter profit and revenue that exceeded analysts’ expectations as the banking giant released money set aside for loan losses.