Goldman Sachs beats by $1.04, beats on revs (167.00)
Reports Q2 (Jun) earnings of $4.10 per share, $1.04 better than the Capital IQ Consensus Estimate of $3.06; revenues rose 6.0% year/year to $9.13 bln vs the $7.96 bln consensus.
- Book value per common share and tangible book value per common share both increased approximately 2% during the quarter to $158.21 and $148.45, respectively.
- Net revenues in Investment Banking were $1.78 billion for Q2, 15% higher y/y and essentially unchanged q/q.
- Net revenues in Financial Advisory were $506 million, slightly higher y/y.
- Net revenues in Underwriting were $1.28 billion, 20% higher y/y, primarily due to significantly higher net revenues in equity underwriting, reflecting an increase in industry-wide activity.
- Net revenues in debt underwriting were slightly higher y/y.
- Net revenues in Institutional Client Services were $3.83 billion for Q2, 11% lower y/y and 14% lower q/q.
- Net revenues in Fixed Income, Currency and Commodities Client Execution were $2.22 billion, 10% lower y/y, due to significantly lower net revenues in currencies and, to a lesser extent, commodities. In addition, net revenues in credit products were slightly lower. These results were partially offset by higher net revenues in mortgages and interest rate products compared with the second quarter of 2013.
- Net revenues in Equities were $1.61 billion, 13% lower y/y. Excluding net revenues related to the firm's Americas reinsurance business, which was sold in the second quarter of 2013, net revenues in Equities were 9% lower than the second quarter of 2013, reflecting significantly lower net revenues in derivatives and lower commissions and fees. The decrease in commissions and fees primarily reflected generally lower volumes, particularly in the United States and Asia.
- Net revenues in Investing & Lending were $2.07 billion for Q2, 46% higher y/y and 36% higher q/q. Results for the second quarter of 2014 included net gains of $1.25 billion from investments in equities, primarily in private equities, driven by company-specific events and strong corporate performance.
- Net revenues in Investment Management were $1.44 billion for Q2, 8% higher y/y and 8% lower q/q. The increase in net revenues compared with the second quarter of 2013 was due to higher management and other fees, reflecting higher average assets under supervision.
- Operating expenses were $6.30 billion, 6% higher y/y and essentially unchanged q/q.
- Compensation and Benefits was $3.92 billion for Q2, 6% higher y/y, reflecting an increase in net revenues. The ratio of compensation and benefits to net revenues for the first half of 2014 was 43.0%, consistent with the first half of 2013.
- Non-Compensation Expenses were $2.38 billion, 5% higher y/y and 4% higher q/q. The increase compared with the second quarter of 2013 reflected higher other expenses, due to higher net provisions for litigation and regulatory proceedings, and an increase in depreciation and amortization expenses, reflecting impairment charges in the second quarter of 2014 related to consolidated investments. Net provisions for litigation and regulatory proceedings for the second quarter of 2014 were $284 million compared with $149 million for the second quarter of 2013.
- Book value per common share was $158.21 and tangible book value per common share was $148.45, both approximately 2% higher compared with the end of the first quarter of 2014.