The prestigious financial firm goldman Sachs is the first of the "big guns" in the sector to report its second quarter results. It has already paid back its $US10 billion ($12.6 billion) taxpayer-funded loan.
US banking giant Goldman Sachs has executed an extraordinary comeback after the near meltdown of the US financial sector last year.It has delivered more than $4 billion in second-quarter net profit, easily surpassing analysts' expectations.
So the banks, which provided the taxpayer with billions of dollars and pounds, are now returning large profits. Goldman Sachs, which was given $10bn (£6bn) state aid last year, has unveiled a $2bn profit. And its staff all get handsome bonuses while its directors laugh all the way to the bank (every day, straight after breakfast).
Goldman’s revenue in the three months ended June 26 was $13.8 billion, compared with $9.43 billion in the first quarter and $9.42 billion in the second quarter a year earlier. Net income rose to $3.44 billion, or $4.93 a share.
But analysts say investors should consider those results to be uniquely Goldman’s and not indicative of what we’ll be seeing from the greater financial sector. Traders said Goldman made several key moves during the quarter. The bank:
- Played the whipsaw volatility in the global credit markets by trading bonds to generate part of its quarterly fortune.
- Properly played a similar pattern in U.S. stocks this year, profiting as an early-year plunge reversed course and turned into one of the most-powerful short-term.
- Capitalized on such commodities as oil, while also trading volatile currencies.
- And made the most of its position as one of the few remaining heavyweight-investment-banking firms willing and able to service the deal-making market. It reaped lucrative fees from the high-margin business of underwriting stock offerings, which have surged anew this year
“Goldman really is in a class by themselves,” said Phillip Silitschanu, a senior analyst with Aite Group. “They’ve always been the golden child of the market.”
Of course, Goldman also benefited because there are fewer competitors on Wall Street following the demise of Bear Stearns Cos. and Lehman Brothers Holdings Inc. in 2008. Both companies were felled by their investments in risky, and ultimately failed, mortgage-backed securities.
JPMorgan Chase & Co. (JPM: 34.70 0.00 0.00%), which reports today (Wednesday), will have a similar challenge, and still tther firms - such as and Bank of America Corp. (BAC: 12.91 0.00 0.00%) and Citigroup Inc. (C: 2.92 0.00 0.00%), which report later this week - continue to struggle under the weight of their toxic assets.