Trading, stock underwriting propel Goldman to record profit
Filed under: Company News, Earnings
Once again, the trading desk at Goldman Sachs (GS) helped the firm post profits that handily outpaced most analysts' expectations.
On Tuesday, Goldman posted a second-quarter earnings of $3.44 billion, or $4.93 a share. That's compared to the $3.65 a share forecast by analysts. And not only did it eclipse the $2.05 billion profit it reported in the same period a year ago, but it surpassed its previous record of $3.22 billion logged two years ago.
"Our second quarter results reflected the combination of improving financial market conditions and a deep and diverse client franchise," said Goldman CEO Lloyd Blankfein in a statement.
The results may be shocking, but they're hardly a surprise. Analysts have been predicting that Goldman's fixed income, credit and commodity traders would report outsize earnings. At $6.8 billion, it was close to triple last year's $2.39 billion.
The group's income is particularly notable because it exceeds the record it just set last quarter, when it booked revenue of $6.56 billion.
But trading revenue wasn't the only highlight in Goldman's second quarter. Riding the wave of bank stock sales in the wake of regulators' stress tests, it made some $736 million in fees from underwriting equity offerings, including those of U.S. Bancorp (USB), BB&T (BBT) and Bank of New York Mellon (BK). That's compared with just $48 million last quarter and $616 million a year ago.
Only JPMorgan Chase (JPM) could claim it helped sell more stock than Goldman during the first half of this year, according to data compiled by Thomson Reuters.
Even as investors focus on Goldman's enormous profit, plenty of people without a stake in the firm's stock will likely notice its huge outlays for to pay its employees. The company said it paid $6.65 billion in compensation, 47.1 percent higher than during the same quarter last year. All told, Goldman spent 49 percent of its revenues on pay, it said.
On Tuesday, Goldman posted a second-quarter earnings of $3.44 billion, or $4.93 a share. That's compared to the $3.65 a share forecast by analysts. And not only did it eclipse the $2.05 billion profit it reported in the same period a year ago, but it surpassed its previous record of $3.22 billion logged two years ago.
The results may be shocking, but they're hardly a surprise. Analysts have been predicting that Goldman's fixed income, credit and commodity traders would report outsize earnings. At $6.8 billion, it was close to triple last year's $2.39 billion.
The group's income is particularly notable because it exceeds the record it just set last quarter, when it booked revenue of $6.56 billion.
But trading revenue wasn't the only highlight in Goldman's second quarter. Riding the wave of bank stock sales in the wake of regulators' stress tests, it made some $736 million in fees from underwriting equity offerings, including those of U.S. Bancorp (USB), BB&T (BBT) and Bank of New York Mellon (BK). That's compared with just $48 million last quarter and $616 million a year ago.
Only JPMorgan Chase (JPM) could claim it helped sell more stock than Goldman during the first half of this year, according to data compiled by Thomson Reuters.
Even as investors focus on Goldman's enormous profit, plenty of people without a stake in the firm's stock will likely notice its huge outlays for to pay its employees. The company said it paid $6.65 billion in compensation, 47.1 percent higher than during the same quarter last year. All told, Goldman spent 49 percent of its revenues on pay, it said.
Why is Oprah going to cable? Hint: It's nothing to get teary about
Kisses from Hershey: Candymaker may court Cadbury with $17 billion bid
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health reform bill?
Reader Comments (Page 1 of 3)
7-14-2009 @ 10:38AM
Andy said...
CROOKS!
Reply
7-14-2009 @ 10:44AM
Marc said...
No surprise, how many billions did they receive in bailout funds? What a f'in joke on the American people. This article should have never been written.
Reply
7-14-2009 @ 10:45AM
Tim Catts said...
Hey Nick, keep that anti-Semitic garbage to yourself. Thanks.
Reply
7-14-2009 @ 11:11AM
Steve said...
They made the profit because the government monies given to AIG was funneled to Goldman. It was legal, but very shady. Seems like Goldman has a few government officials in their pockets. They always seem to get these charmed deals from the government. Goldman and all the other banks are showing government money as profits and patting themselves on the back and getting paid Billions. Give another quarter or two to see what the real deal is for all the banks.
In the end it doesn't matter what they make as profits. Unemployment is 10%. California, Ohio, Florida to name a few are going bankrupt. The U.S dollar will be worthless, inflation will surge and taxes will rise. Exactly the opposite of what Obama campaigned on. He promised to help Main St and hurt Wall St. Well Wall St is giving themselves record pay after receiving government money and Main St is unemployed. Is this the change we were promised? We have naive idiot president that pals around with the President of France, a country that hates the U.S. And goes around the world kissing ass. And he has a moron as a Vice president and even worse with the finance people he put in place. Its going to get alot worse from here for the 98% of us, 2% will be richer then ever before
Reply
7-14-2009 @ 11:52AM
jessie said...
you are correct and not to mention goldman sachs, george soros and citigroup are the biggest speculators out there, look at what they have done to stocks
7-14-2009 @ 12:14PM
Bob said...
Steve said: "Seems like Goldman has a few government employees in their pocket."....Goldman only needed one government official in their pocket, former Goldman CEO Henry Paulson....What's incredible is why THAT connection isn't headlines!! The corruption that was 8 dreadful years of G W Bush is continuing to haunt America......
7-14-2009 @ 11:40AM
marigwanna420 said...
they need an individual bailout.... this is what they should have done in the first place..... they gave the money to the top and expected it to trickle down.... nope..... you need to give it to the bottom and it will go up..... if you split up the 1 trillion, we all know it was much more, between all the taxpayers, everyone would get around $15,000 imagine giving every taxpayere $15,000 the economy would BOOM!!!!!!! the banks would be ok because people would pay thier bills.... there would be so much spending going on that businesses would need to hire... you hire people then the economy turns around even more...... it wouldve been the infusion that we needed..... coupled with the low gas prices, which businesses still havnt dropped their price hikes from "higher fuel costs", it is the taxpaer money and if it simply went back to us, we would have been able to save the economy and the country would have made it back in no time from the better economy
Reply
7-14-2009 @ 12:03PM
Bob said...
LOL!! Blaming Obama? How conveniently you forget former Goldman Sachs CEO Henry Paulson, Bush's Treasury head, passing the first TARP with NO STRINGS ATTACHED.....Does the demise of Lehman Brothers, the top competitor to Goldman Sachs, which was allowed to fail under Bush's watch, setting up Goldman Sachs to reap the the windfall which it now currently enjoys ring any bell in your narrow head? Just wondering....
Reply
7-14-2009 @ 12:14PM
STEVE said...
If you did what Henry Paulson did ,handad a note to a bank teller for $50 Your ass would be in jail for bank robery.
Yet Poulson handed over 2 page note demandin billions and he got away with that ,and you fools,THE TAX PAYERS ,WILL BE PAYING FOR IT.
Goldman took your socks AND EVERYTHING ELSE you thought you had.They insured their loses with AIG and when PAULSON got all that cash to bail out AIG that money went right to GOLDMAN to pay claims on their insured loses.That is where this huge "PROFIT" came from.
KEPP GITMO OPEN FOR PAULSON AND THE REST OF WALL ST. TERRORISTS
Reply
7-14-2009 @ 12:15PM
Bruce Wilhite said...
Now we know where some of the stimulus money went. So, let's examine who benefits from the resurgence of Goldman-Sachs.
Reply
7-14-2009 @ 12:16PM
Stan said...
No doubt giving all this money to big banks it ends up in a few individuals pockets. As away the Rich get Richer and the poor have babies. Its been that way since the beginning of time. The few aways control the many. Its hard to enter the rarified air of the few. Working for someone unless its one of the major wall street firms rarely allows you to achieve the good life. Everything works against you, taxes, fuel, housing, utilities, health care etc. Successful owners of businesses are able to pass many of these expenses onto the business and eventually onto the end user, the working stiff.
Reply
7-14-2009 @ 12:24PM
skids said...
absoulutely right on the money
7-14-2009 @ 12:21PM
Dan said...
Those Goldman Sachs "PROFITS" are all "PROFITS" from Oil-trades profits from both manipulated bid-shilling transactions to short selling!
Why do you think "ONLY" Goldman Sachs is the "ONLY" one profiting in the "COMMODITY" corruption, manipulation trading business during these most hectic times????
It's Manipulations & 1000% beyond pure CORRUPTIONS!!!
While many investors lose, Goldman Sachs is the only one VACUUMING the winnings. That's where all of the BILLION$$$ of DOW "lost" has been going!!!
This is a Foreign Company from "FOREIGN LAND" that is mining and pirating all the WEALTHS on American soil to BUY America!
Reply
7-14-2009 @ 2:20PM
LaBurladora said...
Goldman Sachs is the devil.
Reply
7-14-2009 @ 12:47PM
dan said...
The stimulus most be working..................and gee they've only spent $150 billion of the $750 billion allocated.
Reply
7-14-2009 @ 12:56PM
dan said...
Half the money you send to government is ripped off by the wealthy and corporate socialists that have taken control of your tax dollar for their benefit. Read Free Lunch, by David Cay Johnston, and get a real blood pressure spike. After meditating and some aspirin, start writing, emailing your congressman. People don't realize how good governance makes a difference in your quality of life, and when money is being spent on things like stadiums for billionaires, tax dollars are being diverted from parks, sewage, water, schools, etc.. Why do you think people in Denmark are happy paying a 50% tax rate? Because they are more democratic then we are. And when you think about all the taxes you pay you’re at 50% and the wealthy investors, like Goldman, a hedge fund, pay 15% because they create jobs. Ya right, in China.
Reply
7-14-2009 @ 1:34PM
MYKITTYWINKS said...
The congress and the whole democratic party have been building up this company. I guess it runs Obama and his corrupt administration.
Reply
7-14-2009 @ 2:07PM
paulZ said...
Dillinger! no big deal, Bonnie and Clyde = Peons, Capone, Gotti, Coloumbo all nothing, The greatest criminals of all time are Obama's buddies, the executive's over at Goldman Sachs
Reply
7-17-2009 @ 6:48AM
STEVE said...
Paul z!!!! Henry Poulson was GOLDMAN SUCKS CEO,and GW'S Secretary of Tresury when first billions were dolled out. Henry Poulson visited China 70 times during his stint at Goldman,I can only guess that he was looking how to invest Americas money with Communist Chinese .You know THOSE HORRIBLE REDS we been told to be afraid off as kids going to bed at night!!
7-14-2009 @ 1:49PM
jay said...
PAULSON an ex GOLDMAN CEO ... hummm, GOLDMAN gets $13 BILLION via back door from AIG ... hummm, GREENBERG ex CEO AIG gets to keep the $4.2 billion from AIG hidden off shore account and the USA Taxpayers pick up the tab. The FRENCH aristocrates said " let them eat cake " and now it is time for heads to ROLL.
Reply