Goldman Sachs Shares Gain After Topping Q2 Performance; Hikes Dividend By 25%

Goldman Sachs Group, Inc GS reported second-quarter FY22 revenue of $11.86 billion, down 23% year-on-year, squashing the consensus of $10.96 billion.

The decrease reflected significantly lower revenues in Asset Management and Investment Banking, partially offset by significantly higher revenues in Global Markets and Consumer & Wealth Management. 

The profit fell 48% Y/Y to $2.79 billion, driven by industrywide declines in investment banking revenue. EPS of $7.73 beat the consensus of $7.25.

Segmental Performance: Investment Banking generated revenues of $2.14 billion, down 41% Y/Y, reflecting significantly lower revenues in Underwriting. The revenue included substantial revenues in Financial advisory. 

Global Markets generated revenues of $6.47 billion, up 32% Y/Y, reflecting solid performances in Fixed Income, Currency and Commodities (FICC), and Equities, particularly in financing. Consumer & Wealth Management generated revenues of $2.18 billion, up 25% Y/Y.

Asset Management revenues were $1.08 billion, down 79% Y/Y, reflecting net losses in Equity investments and significantly lower net revenues in Lending and debt investments, partially offset by substantially higher Management and other fees. 

Firmwide assets under supervision rose by $101 billion during the quarter, including inflows of $305 billion from the acquisition of NN Investment Partners (NNIP), to a record $2.50 trillion. Firmwide Management and other fees were a record $2.23 billion, up 22% Y/Y. 

Expenses: The operating expenses stood at $7.65 billion against $8.64 billion a year ago. Compensation and benefits expenses of $3.70 billion dropped from $5.26 billion a year ago.

The net interest income of $1.73 billion improved from $1.63 billion a year earlier. Provision for credit losses of $667 million stacked against a net benefit of $92 million a year ago.

Dividend & Buybacks: During the quarter, Goldman returned $1.22 billion of capital to common shareholders through buybacks and dividends. On July 14, the board approved a 25% quarterly dividend increase beginning in Q3.

Price Action: GS shares traded higher by 3.79% at $305 in the premarket on the last check Monday.