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The Goldman Sachs Group, Inc.’s (GS - Free Report) second-quarter 2024 earnings per share of $8.62 surpassed the Zacks Consensus Estimate of $8.52. This compares favorably with $3.08 reported in the year-earlier quarter.
Goldman’s results have benefited from the strength in Fixed Income, Currency and Commodities Client Execution (FICC) financing revenues, investment banking (IB) and consumer banking business. Further, a decline in expenses and provisions acted as a tailwind.
Net earnings of $3.04 billion increased significantly from $1.22 billion in the prior-year quarter.
Revenues Increase and Expenses Fall
Net revenues for the quarter of $12.73 billion increased 16.9% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $12.6 billion.
Total operating expenses decreased marginally year over year to $8.53 billion.
Provision for credit losses was $282 million, plunging 54.1% year over year.
Quarterly Segmental Performance Improves
The Asset & Wealth Management division generated revenues of $3.88 billion in the reported quarter, up 27.3% year over year. The improvement was driven by higher management and incentive fees, equity investments and higher net revenues in Debt investments, which was partially offset by lower net revenues in Private banking and lending.
Firmwide assets under supervision were a record $2.93 trillion, up 8.1% from the prior-year quarter.
The Global Banking & Markets division has recorded revenues of $8.18 billion, which increased 13.8% year over year. The improvement was due to an increase in the IB business (up 21.1%), higher revenues in FICC (up 17.3%), along with a rise in equities revenues (up 6.8%).
The Platform Solutions division’s revenues were $669 million, up 1.5% year over year. The rise was driven by higher revenues from consumer platforms.
Capital Ratios Improves
As of Jun 30, 2024, the standardized Common Equity Tier 1 capital ratio was 14.8%, up 14.6% on a sequential basis. The company’s supplementary leverage ratio was 5.4%, which remained unchanged from the previous quarter.
Capital Distribution Update
During the reported quarter, Goldman returned $4.43 billion of capital to common shareholders. This included $3.50 billion in share repurchases and common stock dividends of $929 million.
Further, following the clearance of the 2024 stress test, on Jul 12, GS’ board of directors approved a 9% increase in common stock dividend to $3 per share.
Our View
Goldman’s well-diversified business will continue to support its earnings stability in the upcoming period. Strong performance in IB, FICC financing revenues and consumer banking business acted as a tailwind. Active client engagement and a solid position in announced and completed mergers and acquisitions globally are likely to act as tailwinds. However, a potential economic slowdown is a near-term concern.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
Wells Fargo & Company's (WFC - Free Report) second-quarter 2024 earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.25.
WFC's results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income, as well as loan and deposit balances, and an increase in expenses were the undermining factors.
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2024 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.43. Also, the bottom line reflects a rise of 9.4% from the prior-year quarter.
BK's results have been primarily aided by a rise in fee revenues and lower expenses. The assets under custody and/or administration and assets under management balances grew on a solid market rally. However, a decline in net interest revenues hurt the results to some extent.
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Goldman (GS) Q2 Earnings Beat Estimates, IB Revenues Rise Y/Y
The Goldman Sachs Group, Inc.’s (GS - Free Report) second-quarter 2024 earnings per share of $8.62 surpassed the Zacks Consensus Estimate of $8.52. This compares favorably with $3.08 reported in the year-earlier quarter.
Goldman’s results have benefited from the strength in Fixed Income, Currency and Commodities Client Execution (FICC) financing revenues, investment banking (IB) and consumer banking business. Further, a decline in expenses and provisions acted as a tailwind.
Net earnings of $3.04 billion increased significantly from $1.22 billion in the prior-year quarter.
Revenues Increase and Expenses Fall
Net revenues for the quarter of $12.73 billion increased 16.9% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $12.6 billion.
Total operating expenses decreased marginally year over year to $8.53 billion.
Provision for credit losses was $282 million, plunging 54.1% year over year.
Quarterly Segmental Performance Improves
The Asset & Wealth Management division generated revenues of $3.88 billion in the reported quarter, up 27.3% year over year. The improvement was driven by higher management and incentive fees, equity investments and higher net revenues in Debt investments, which was partially offset by lower net revenues in Private banking and lending.
Firmwide assets under supervision were a record $2.93 trillion, up 8.1% from the prior-year quarter.
The Global Banking & Markets division has recorded revenues of $8.18 billion, which increased 13.8% year over year. The improvement was due to an increase in the IB business (up 21.1%), higher revenues in FICC (up 17.3%), along with a rise in equities revenues (up 6.8%).
The Platform Solutions division’s revenues were $669 million, up 1.5% year over year. The rise was driven by higher revenues from consumer platforms.
Capital Ratios Improves
As of Jun 30, 2024, the standardized Common Equity Tier 1 capital ratio was 14.8%, up 14.6% on a sequential basis. The company’s supplementary leverage ratio was 5.4%, which remained unchanged from the previous quarter.
Capital Distribution Update
During the reported quarter, Goldman returned $4.43 billion of capital to common shareholders. This included $3.50 billion in share repurchases and common stock dividends of $929 million.
Further, following the clearance of the 2024 stress test, on Jul 12, GS’ board of directors approved a 9% increase in common stock dividend to $3 per share.
Our View
Goldman’s well-diversified business will continue to support its earnings stability in the upcoming period. Strong performance in IB, FICC financing revenues and consumer banking business acted as a tailwind. Active client engagement and a solid position in announced and completed mergers and acquisitions globally are likely to act as tailwinds. However, a potential economic slowdown is a near-term concern.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
The Goldman Sachs Group, Inc. price-consensus-eps-surprise-chart | The Goldman Sachs Group, Inc. Quote
Currently, Goldman carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Big Banks
Wells Fargo & Company's (WFC - Free Report) second-quarter 2024 earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.25.
WFC's results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income, as well as loan and deposit balances, and an increase in expenses were the undermining factors.
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2024 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.43. Also, the bottom line reflects a rise of 9.4% from the prior-year quarter.
BK's results have been primarily aided by a rise in fee revenues and lower expenses. The assets under custody and/or administration and assets under management balances grew on a solid market rally. However, a decline in net interest revenues hurt the results to some extent.