Goldman Sachs Tops Earnings Expectations [u]

Goldman Sachs (NYSE:GS) has posted Q2 earnings that have topped expectations. Goldman CEO and Chairman David M. Solomon issued the following statement:

“Our second-quarter performance and record revenues for the first half of the year demonstrate the strength of our client franchise and our continued progress on our strategic priorities. While the economic recovery is underway, our clients and communities still face challenges in overcoming the pandemic. But, as always, I am proud of the dedication and resilience of our people, who have worked tirelessly to help our clients navigate the ever-changing market environment.”

Q2 revenues came in at $15.39 billion with net earnings at $5.49 billion or $15.02 earnings per share the second-highest net earnings and EPS ever.

For the first half of 2021, net revenues were $33.09 billion and net earnings were $12.32 billion.

Goldman’s Investment Banking division generated its second-highest quarterly net revenues of $3.61 billion.

Goldman’s growing consumer and wealth management division, which includes digital bank Marcus, generated net revenues of $1.75 billion for the second quarter, 28% higher than the second quarter of 2020 and essentially unchanged compared with the first quarter of 2021.

Net revenues in Wealth management were $1.38 billion, 25% higher than the second quarter of 2020.

Net revenues in Consumer banking were $363 million, 41% higher than the second quarter of 2020, reflecting higher deposit and credit card balances.

Goldman also announced an increase in its dividend to $2/share.

Update:

During the earnings call, Goldman provided additional insight into its operations and perspective.

Goldman noted that the Apple Card profile was more positive than they [initially] expected. They are now accelerating that growth noting there are more opportunities with Apple. Goldman also pointed to the Apple Card Family plan that was recently released.

In general, Goldman said they are in the “3rd inning” of its tech strategy as they leveraging existing skills to scale. Over time, Goldman expects to generate higher returns at scale. As Goldman’s Fintech services, and Marcus, is a greenfield development, the firm is not encumbered by legacy hurdles (like unnecessary bank branches).

Goldman has always grumbled a bit that Fintechs tend to capture a higher multiple than they do but clearly, the bank expects that, over time, they will be rewarded for the marginal returns their tech stack will be able to deliver on a global basis.

 

 

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