Goldman Sachs’ second quarter profit up 44%; CEO Blankfein to retire

In this Dec. 13, 2016, file photo, the logo for Goldman Sachs appears above a trading post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, File)
Updated 18 July 2018
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Goldman Sachs’ second quarter profit up 44%; CEO Blankfein to retire

  • The New York-based bank said Tuesday that earnings reached $2.35 billion in the second quarter
  • Nearly all of Goldman’s businesses saw double-digit growth in the second quarter

NEW YORK: Goldman Sachs’ profits jumped 44 percent in the second quarter compared with a year ago, driven by the investment bank’s core franchises: advising companies on mergers, acquisitions and other deals, and its trading business.
The New York-based bank said Tuesday that earnings reached $2.35 billion in the second quarter, compared with $1.63 billion a year earlier. On a per-share basis, Goldman earned $5.98 a share, compared with $3.95 a share a year earlier, beating analysts’ forecasts of $4.65 a share.
Separately, Goldman said Chief Executive Officer Lloyd Blankfein will retire as of Oct. 1, and be replaced by David Solomon, the president and chief operating officer. Blankfein has been CEO since 2006.
Nearly all of Goldman’s businesses saw double-digit growth in the second quarter. Trading was particularly strong. Goldman’s institutional client services division, which contains the firm’s trading operations, posted net revenues of $3.57 billion in the quarter, up 17 percent from a year earlier.
Goldman’s trading performance can be fickle, driven by whether the market was volatile that quarter and whether the right sort of securities saw the right sort of movement. Like its competitor Morgan Stanley, which will report results Wednesday, Goldman has been looking to diversify its businesses, moving in recent years into consumer lending and consumer banking.
Goldman’s investment banking business also had a solid quarter, posting net revenues of $2.05 billion, which is up 18 percent from a year earlier. The firm saw both higher underwriting revenue, as well as revenue for advisory services.
The firm’s return on equity ratio, a closely watched performance gauge for banks like Goldman Sachs which measures how much money the bank earned with the money investors have lent it, was 12.8 percent in the quarter. Banks like Goldman try to keep that figure above 10 percent.
Company-wide net revenues were $9.4 billion in the quarter, also beating analysts’ expectations.
Goldman shares fell 0.8 percent to $229.25 in premarket trading.


World’s biggest sovereign fund worried about trade wars

Updated 21 August 2018
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World’s biggest sovereign fund worried about trade wars

  • The fund posted a positive return of 1.8 percent, or 167 billion kroner ($19.8 billion), in the second quarter
  • Markets are worried about a trade dispute between the United States and China

OSLO: The managers of Norway’s sovereign wealth fund, the world’s biggest, expressed concern Tuesday about global trade tensions, which could heavily impact its value.
The fund posted a positive return of 1.8 percent, or 167 billion kroner ($19.8 billion), in the second quarter, helping erase a loss of 171 billion kroner in January-March that was attributed to a volatile stock market.
The Government Pension Fund Global, which saw its total value swell to 8.33 trillion kroner by the end of June, manages the country’s oil revenues in order to finance Norway’s generous welfare state when its oil and gas wells run dry.
But Norway’s central bank, which runs the fund, said geopolitical and trade tensions presented a risk.
“It’s fair to say that increased trade barriers or even trade wars will not be beneficial for the fund as a long-term global investor,” Trond Grande, the deputy chief of Norges Bank Investment Management, told reporters.
Markets are worried about a trade dispute between the United States and China. Accusing Beijing of unfair competition, the US administration is considering slapping a new round of levies worth $200 billion on Chinese goods.
Talks between the two slated for Wednesday and Thursday aimed at resolving the dispute have however eased concerns somewhat.
Following US-Turkey tensions that sent the Turkish lira and the Istanbul stock market tumbling, the Norwegian fund said its assets there were worth less than the 23 billion kroner they were at the beginning of the year.
“We’ve seen the market rise for a long time, that there are different political and geopolitical events in the world that can affect the market, and we have to be prepared for the fact that (the value of) the fund can go down a lot,” Grande concluded.
The fund’s strong second quarter was attributed primarily to its share portfolio, which accounts for 66.8 percent of its investments and which rose by 2.7 percent.
Real estate holdings, which account for 2.6 percent of its holdings, rose by 1.9 percent, while bond investments, which represent 30.6 percent, remained flat.
Faced with falling oil revenues in recent years, the Norwegian government has been tapping the fund to finance public spending since 2015. But with oil prices recovering, the fund registered its first inflow in three years in June.