Goldman profits rise by 5% beating market expectations

US bank’s net revenue from fixed-income and falls by 10 per cent to $2.22 billion

Tue, Jul 15, 2014, 16:53

Goldman Sachs reported a 5 per cent rise in quarterly profit, spurred by higher revenue from investment banking and a smaller decline in fixed-income trading than many on Wall Street had predicted.

The bank’s stock rose about 2 per cent to $169.86 before the bell today. Goldman earned $1.95 billion, or $4.10 per share, in the three months ended June 30, up from $1.86 billion, or $3.70 per share, in the same period a year earlier.

Analysts on average had expected earnings of $3.05 per share. “Good client activity in investment banking and investment management as well as a better environment for our investing and lending activities helped offset less favorable conditions for institutional client services,” chief executive Lloyd Blankfein said in a statement.

Institutional investors have been shying away from the bond market because of a lack of strong opinions about interest rates and currency moves.

Goldman’s net revenue from fixed-income, currency and commodity trading, known as FICC, fell 10 per cent to $2.22 billion.

Separately, JPMorgan, the biggest US bank by assets, said today that second-quarter profit fell 8 per cent after customer stock and bond trading volume dropped and mortgage lending fees plunged. The results were not as bad as investors had feared, and the bank’s shares rose 3.5 per cent to $58.26 in early trading. Chief Executive Jamie Dimon said the bank had seen “encouraging signs” across its businesses toward the end of the quarter, including businesses drawing more from credit lines.

But the bank’s executives also sounded notes of caution, noting that it was “too early to assume that this momentum will continue.”

Speaking on a conference call with analysts, Mr Dimon said that companies are still not stepping up capital spending. On a conference call with reporters, Chief Financial Officer Marianne Lake said the pickup in bond trading revenue that the bank saw in June has not continued through July. The report is the bank’s first since Dimon disclosed that he had throat cancer.

Mr Dimon told reporters today, “I feel great,” and added that he would stay engaged with the business as he underwent treatment. He said for the first time that he was advised to take a few weeks of rest after his eight weeks of treatment.

The bank’s net income fell to $5.99 billion, or $1.46 per share, from $6.5 billion, or $1.60 per share, in the same quarter of 2013. Revenue fell 3 percent to $24.45 billion.