Post Earnings Coverage as Goldman Sachs Reports Strong Numbers

LONDON, UK / ACCESSWIRE / July 20, 2016 /Active Wall St. announces its post-earnings coverage on The Goldman Sachs Group Inc. (NYSE: GS). The company released its Q2 FY16 financial results on Tuesday, July 19, 2016. The investment bank that currently has $1.31 trillion in assets under supervision reported that quarterly earnings rose 74%, boosted from a sharp drop in legal costs and its shrinking bottom line. Register with us now for your free membership at:

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Earnings Reviewed

For the period ending on June 30, 2016, Goldman’s reported net income of $1.82 billion, or $3.72 per share, higher than $1.05 billion, or $1.98 per share, in the year ago period. The sharp rise in earnings was attributed to a nearly $1.3 billion decline in “other expenses,” which consists of legal costs. For Q2 FY16, revenue declined 13% to $7.93 billion from $9.07 billion in Q2 FY15. Analysts estimated that the bank would earn $3 per share on revenue of $7.58 billion.

Banks Reporting Improves

The on-going earnings season has been a welcome breather for the beleaguered banks. JPMorgan Chase & Co. (NYSE: JPM) earnings on July 14, 2016, topped analysts’ estimates. On July 15, 2016, Wells Fargo & Co. (NYSE: WFC) matched earnings expectations, while Citigroup Inc. (NYSE: C) topped earnings estimate as well. On July 19, 2016, Bank of America Corp. (NYSE: BAC) also reported better-than-expected top and bottom line. Sign up now and get more on JPM: http://www.activewallst.com/registration-3/?symbol=JPM.

For Q2 FY16, Goldman’s investment banking business brought in $1.79 billion, from $2.02 billion in Q2 FY15 attributed to stronger-than-expected bond underwriting revenues and a healthy backlog of M&A deals. Goldman’s Investing & Lending segment, which comprises of private equity and other alternative investments, saw revenues decline to $1.1 billion, or 38%. Goldman’s investment management business reported revenue of $1.35 billion in Q2 FY16, down 18% from $1.65 billion in the year earlier quarter. Debt-underwriting revenue increased 20% to $724 million which Goldman stated was the division’s second- highest quarterly performance ever.

Goldman’s trading unit was the only division to post an increase in revenue as compared to Q2 FY15, bolstered by stronger-than-expected revenues from bond trading; Britain’s decision on June 24 to leave the European Union also provided a tailwind. The firm’s fixed income commodity and currency trading division posted a 20% rise in revenues to $1.93 billion, helping its overall trading unit to $3.68 billion in total revenues, a 2% increase; however the increase in trading revenue is lower than other major Wall Street’s banks – J.P. Morgan’s trading revenue gained 25% from Q2 FY15; Bank of America reported that its trading revenue advanced 19%; and Citigroup’s trading revenue grew 15%.

Goldman said that it reduced overall staffing by 5% in Q2 FY16. Also, compensation declined 13% to $3.3 billion in Q2 FY16 which Goldman attributed to a decrease in net revenue. Goldman’s return on equity, a closely watched measure of banks’ profitability, stood at 8.7% during Q2 FY16. While profit that was up from 4.8% in Q2 FY15, it is still way below the 20% the megabank regularly topped prior to the 2008-2009 financial crisis.

Share Repurchase and Guidance

Goldman Sachs’ board of directors of authorised a dividend of $0.65 per common share, payable on September 29, 2016 to common shareholders of record on September 1, 2016. During Q2 FY16, Goldman repurchased 11.1 million shares of its common stock at an average price of $156.60 per share, for a total cost of $1.74 billion.

Stock Performance

Goldman’s shares declined 1.18% to close July 19, 2016, trading session at $161.41, with 5.4 million shares changing hands. The bank’s stock has gained 10.83% in the past one month and 9.68% on an YTD basis as compared to S&P 500 which is up 7.14% during the same time frame.

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