Goldman profit blows past estimates on trading surge

(Reuters) – Goldman Sachs Group Inc’s (GS.N) trading revenue doubled in the second quarter, driven by big swings in stock and bond markets since March, helping the bank beat estimates for quarterly profit by a wide margin.

The bank’s shares jumped nearly 4% in premarket trading as it posted a 93% surge in revenue in its global markets unit, which houses the trading business, cushioning it from the coronavirus downturn.

The performance highlighted the resurgence in trading across Wall Street banks in the second quarter, with JPMorgan Chase (JPM.N) also reporting a huge quarter as financial market volumes hit record-breaking levels.

The bank’s net earnings applicable to common shareholders rose 2% to $2.25 billion in the quarter ended June 30. Earnings per share rose to $6.26 from $5.81 a year earlier.

Analysts had expected a profit of $3.78 per share, on average, according to the IBES estimate from Refinitiv.

Investment banking revenue, which includes underwriting, jumped 36% to $2.66 billion. Overall revenue jumped 41% to $13.30 billion, comfortably beating estimates.

The bank reported a return on equity (ROE) of 11.1% for the quarter and return on tangible common equity (ROTE) of 11.8%, two key measures of profitability. Goldman said in January it aims to deliver a 13% return on equity and over 14% return on tangible equity within the next three years.

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