Goldman Sachs (GS, Financial) announced second-quarter earnings on July 18, reporting revenue of $7.98 billion, decreasing -0.5% from the comparable quarter and beating estimates by $370 million.
Earnings per share for the quarter were $3.95 compared to $3.72 for the second quarter of 2016. Following the company’s earnings announcement the stock was down approximately 3% and trading at $223.18.
Throughout the first half of the year, Goldman Sachs has reported a number of initiatives including advanced technology developments and expansion for its retail business. All of the initiatives appear to be supporting revenue growth, but the firm reported disappointing trading revenue which was the main factor for the lower year-over-year results.
For the second quarter, net revenue was $7.98 billion and net earnings were $1.83 billion. For the first half of the year, revenue is now $15.9 billion and net earnings are $4.1 billion with earnings per share of $9.10.
The company has been working to significantly modernize its technology infrastructure to support more interconnected communication throughout the firm. Most recently it reported on Deal Link, a technology system the firm has been developing to automate initial public offering deals. initiation public offering deals.
In the retail market, it continues to see success from its new online lending platform, Marcus, which has already surpassed $1 billion in loan originations and is estimated to reach $2 billion in originations by the end of the year. Additionally, in the first half of the year the company also increased the interest rate on its retail savings deposit accounts to one of the highest in the industry at 1.20% and reported plans for developing an iPhone app for its retail clients.
Success from these initiatives can be seen in the company’s revenue results for the first half of the year.
Investment banking revenue has gained 6%, investment management has gained 12%, and in investing and lending the firm is reporting a revenue increase of 154%. Overall, revenue for the first half of the year is up 12%.
Institutional client services is the only business category reporting decreased revenue in 2017 with lower trading volumes affecting sales results. Institutional client services reported revenue of $6.4 billion, a decrease from $7.1 billion in the first half of 2016. In institution client services, fixed income trading was down -21% from the first half of 2016 and equity trading and services increased 1%.
Across the industry, trading revenue has broadly been a factor for all large banks. Despite the trading revenue decreases, all the major U.S. banks reporting results for the second quarter have beat earnings estimates.
Disclosure: I do not own any shares of Goldman Sachs.
