Banking, finance, and taxes

How Goldman Sachs Beat Q2 Earnings Forecasts

Chris Lange

Published: July 19, 2016 8:55 am

Last Updated: January 13, 2020 5:35 am

Goldman Sachs Group Inc. (NYSE: GS) reported its second-quarter financial results before the markets opened on Tuesday. This megabank made a solid recovery over the course of this quarter, with its fee income coming back online. Not to mention, Goldman Sachs ranked first in worldwide announced and completed mergers and acquisitions year to date. Currently, this investment bank has $1.31 trillion assets under supervision. Second-quarter earnings were very impressive as well.

The company said that it had $3.72 in earnings per share (EPS) on $7.93 billion in revenue. The consensus estimates from Thomson Reuters had called for $3.00 in EPS on revenue of $7.58 billion. In the same period of last year, Goldman Sachs posted EPS of $1.98 and $9.07 billion in revenue.

Book value per common share increased by 2% during the quarter to $176.62.

In the second quarter, the firm maintained strong capital ratios and liquidity. At the end of June, the firm’s Common equity Tier 1 ratios, as calculated in accordance with the Standardized approach and the Basel III Advanced approach, were 13.7% and 12.2%, respectively. Additionally, the firm’s global core liquid assets were $211 billion at the same time.

In terms of its segments, the company reported:

• Investment banking revenues totaled $1.79 billion.
• Institutional Client Services revenues totaled $3.68 billion.
• Investing & Lending revenues totaled $1.11 billion.
• Investment Management revenues totaled $1.35 billion.

Lloyd Blankfein, chairman and CEO, commented on earnings:

Despite the uncertainty created by Brexit, we achieved solid results by continuing to serve our clients across our diversified franchise and by managing our business efficiently.

The board of directors of Goldman Sachs declared a dividend of $0.65 per common share to be paid on September 29, to common shareholders of record on September 1. Also during the quarter, the firm repurchased 11.1 million shares of its common stock at an average cost per share of $156.60, for a total cost of $1.74 billion.

Shares of Goldman Sachs closed Monday at $163.33, with a consensus analyst price target of $177.57 and a 52-week trading range of $138.20 to $214.61. Following the release of the earnings report, the stock was last trading at $163.70 in early trading indications Tuesday.