Goldman Sachs (GS) earnings fell sharply in the second quarter, hurt by its $550 million settlement with the Securities and Exchange Commission and a U.K. payroll tax, but on an adjusted basis, the investment bank's profits easily topped Wall Street estimates.

"The market environment became more difficult during the second quarter and, as a result, client activity across our businesses declined," CEO Lloyd Blankfein said in a statement. "Looking ahead, we remain focused on helping our clients to raise capital, manage risk and invest for the future, which are all important to economic growth."

For the three months that ended June 30, Goldman Sachs's net income dropped more than 80% to $613 million, or 78 cents a share, from $3.43 billion, or $4.93 a share, in last year's second quarter. Excluding the SEC settlement and the U.K. bonus tax, earnings would have been $2.75 a share. On that basis, analysts were looking for earnings, on average, of $2.08, according to Thomson Reuters.

Revenue dropped more than 35% to $8.84 billion, short of analysts' average forecast of $8.94 billion. Like Bank of America (BAC) and JPMorgan Chase (JPM), Goldman Sachs's capital markets business took a hit during the market's spring and summer swoon. Revenue from trading and investments tumbled nearly 40% versus last year's second quarter, while investment banking revenue declined more than 35%.