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Since the start of the quarter, the Q2 growth rate has risen from -31.7% to -28.3%. (Data provided by Thomson Reuters)
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Goldman Sachs Group reported an 33 percent rise in quarterly earnings on Tuesday as a strong gain in trading was offset by a one-time charge to repay government loans.
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Wall Street's largest surviving investment bank reported net income for common shareholders of $2.7 billion, or $4.93 a share, compared with $2.05 billion, or $4.58 a share, in the closest year-earlier quarter.
The results came in above analysts' consensus forecast.
Analysts polled by Reuters Estimates forecast, on average, $3.49 a share, while those surveyed by First Call predicted earnings per share of $3.54.
Goldman [GS
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], the first major U.S. bank to report second-quarter earnings, saw its performance bolstered by improving markets and strong trading results, as well as an upswing in advisory fees.
Trading income jumped 93 percent from a year ago, while its equity underwriting business produced record revenue of $736 million.
Investment banking revenue of $1.44 billion was down 15 percent from a year ago but rose 75 percent from the 2009 first quarter.
Gains were tempered by a one-time $426 million charge related to the repayment of $10 billion in loans from the U.S. Treasury's Troubled Asset Relief Program, known as TARP.
The strong second-quarter earnings were a result of "basic blocking and tackling for the firm," David Viniar, the bank's chief financial officer, said.
Viniar said the company focused on its core businesses, without ramping up risk.
"We did well across a variety of businesses," Viniar said on a conference call with journalists. "It was very well spread, across equities and underwriting."
He said Goldman's risk portfolio was essentially flat in the quarter, calling it "vanilla" in terms of fears about the bank engaging in too much risk so soon after last year's credit crisis.
Viniar said Goldman benefited from the disappearance of some of its competitors in the investment banking business.
"There is definitely less competition out there," he said, adding that there is also less risk capital available.
Keith Davis, an analyst at Farr, Miller & Washington, said the results appeared to be strong.
"They look like a blowout to me, but I don't think it should be a big surprise to anyone," Davis said. "The environment is very conducive to the type of things they do. Spreads are very wide, fixed income and equity issuances have been pretty strong."
William Smith, chief executive of Smith Asset Management, said, "Things are very fragile but they manage to make money in all environments, which is what you're supposed to do."
With Goldman facing a string of publicity of late, Smith said the bank should be applauded for its performance.
"Goldman should be celebrated, not demonized," he said.
Second-quarter gains were tempered by a one-time $426 million charge related to Goldman's repayment of $10 billion in loans from the U.S. Treasury's Troubled Asset Relief Program, known as TARP.
The company set aside $6.65 billion for compensation in the quarter. The Obama administration is focused on curbing compensation in the banking industry.
—Reuters contributed to this report.
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