Goldman Sachs Group Inc on Tuesday blew past analysts' estimates for second-quarter profit as Wall Street's biggest investment bank capitalized on record global dealmaking activity.
Global mergers and acquisitions activity broke records for the second consecutive quarter this year despite slowing activity among blank-check firms as companies borrowed cheaply and splurged their cash reserves on deals to reposition them for the post-COVID world.
Deals worth $1.5 trillion were announced in the three months to June 30, more than any second quarter on record and up 13 percent from the record first quarter of the year, according to Refinitiv data.
Goldman comfortably held on to its top ranking on the league tables for worldwide M&A advisory, according to Refinitiv. The league tables rank financial services firms on the amount of M&A fees they generate.
Overall financial advisory revenue surged 83 percent, while equity underwriting revenue jumped 18 percent in the quarter.
Investment banking revenue rose 36 percent to $3.61 billion.
Unlike rivals such as JPMorgan and Bank of America, Goldman has a relatively smaller consumer business, which has limited its exposure to loan defaults and allowed it to focus on its core strength in investment banking and trading.
The global markets business, which now houses the trading business, however, reported a 32 percent fall in revenue, compared to last year when Wall Street saw record levels of volatility.
The bank also benefited from favorable comparisons to last year when it set aside more funds to cover potential corporate loan losses due to the pandemic.
Goldman released $92 million from its loan loss reserves in the second quarter, in a sign of the bank's bets on sustained U.S. growth.
Diluted earnings per common share was $15.02, compared with 53 cents a year earlier.
Analysts on average had expected a profit of $10.24 per share, according to the IBES estimate from Refinitiv.
Total net revenue surged 16 percent to $15.39 billion.
(Reporting by Noor Zainab Hussain in Bengaluru and Matt Scuffham in New York; Editing by Sriraj Kalluvila)