--> GS -1.04% pre market
Goldman Sachs beats by $0.81, beats on revs
Reports Q2 (Jun) earnings of $4.75 per share, excluding non-recurring items, $0.81 better than the Capital IQ Consensus Estimate of $3.94; revenues fell 0.6% year/year to $9.07 bln vs the $8.78 bln consensus.
- Annualized return on average common shareholders' equity was 4.8% for Q2. During the quarter, the firm recorded $1.45 billion in net provisions for mortgage-related litigation and regulatory matters. These provisions reduced diluted earnings per common share by $2.77, and reduced annualized ROE 6.7.
- Q2 Net revenues in Investment Banking were $2.02 billion, 13% higher y/y and 6% higher q/q.
- Net revenues in Financial Advisory were $821 million, 62% higher y/y, reflecting an increase in industry-wide completed mergers and acquisitions.
- Net revenues in Underwriting were $1.20 billion, 6% lower y/y due to lower net revenues in debt underwriting, reflecting lower leveraged finance activity.
- Net revenues in equity underwriting were higher, including an increase in net revenues from secondary offerings.
- Net revenues in Institutional Client Services were $3.60 billion for Q2, 6% lower y/y and 34% lower q/q.
- Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.60 billion for the second quarter of 2015, 28% lower y/y. Although net revenues in interest rate products were significantly higher compared y/y, this increase was more than offset by significantly lower net revenues in credit products and, to a lesser extent, mortgages and currencies. Net revenues in commodities were also lower. During the quarter, Fixed Income, Currency and Commodities Client Execution operated in an environment generally characterized by lower levels of client activity and less favorable market-making conditions compared with the first quarter of 2015.
- Commissions and fees were slightly higher compared with the second quarter of 2014.
- Net revenues in Investing & Lending were $1.80 billion for the second quarter of 2015, 13% lower y/y and 8% higher q/q. The decline in net revenues compared with the second quarter of 2014 was primarily due to lower net revenues from investments in equities, as a decrease in net gains from private equities was partially offset by an increase in net gains from public equities.
- Operating expenses were $7.34 billion for Q2, 16% higher y/y and 10% higher q/q. The accrual for compensation and benefits expenses was $3.81 billion for the second quarter of 2015, 3% lower y/y. The ratio of compensation and benefits to net revenues for the first half of 2015 was 42.0%, compared with 43.0% for the first half of 2014.