Goldman Traders’ Best Result in Years Spurs Surprise Profit Gain

Goldman Sachs Group Inc. made the most of a historic market rebound in the second quarter as the Federal Reserve’s stimulus efforts handed a bonanza to Wall Street trading desks.

Revenue from trading stocks and bonds surged 93%, surpassing what analysts had expected by about $2.5 billion and mirroring similar gains reported Tuesday by JPMorgan Chase & Co. and Citigroup Inc. The bank also raked in record fees from helping companies raise cash needed to weather the coronavirus pandemic.

“The turbulence we have seen in recent months only reinforces our commitment to the strategy we outlined earlier this year to investors,” Chief Executive Officer David Solomon said in a statement Wednesday.

The full force of the Fed helped rescue markets reeling from the outbreak and government stay-at-home orders, which had ground economies to a halt around the world. Policy makers’ emergency measures sent companies racing to tap funding sources, and the biggest quarterly stock gains in more than two decades fueled demand for trading services.

The firm’s fixed-income trading revenue more than doubled to $4.24 billion, the highest in nine years, while the equity unit had its best showing in 11 years. The gains propelled net income to a slight surprise gain from a year earlier to $2.42 billion, or $6.26 a share, compared with analysts’ estimates for $3.95 per share.

Shares of Goldman Sachs, down 6.9% this year through Tuesday, rose 4% in early trading at 7:41 a.m. in New York.

Goldman Sachs’s large investment portfolio also rode the rebound after taking a massive markdown in the first three months of the year.

Equity and debt holdings swung to a $1.38 billion gain after producing a hit of almost $900 million in the first quarter. Goldman has said it’s moving away from taking stakes with its own money, and is trying to raise more client funds. The strategy could help limit exaggerated moves that add volatility to the firm’s quarterly results.

The firm’s commodities business is on a hot streak after years of scrutiny, generating more than $1 billion in revenue through May, people familiar with the matter said last month. Goldman Sachs didn’t provide an update Wednesday. The company’s oil traders pounced on unprecedented moves in that market, which saw the price of a barrel of oil dropping below zero in April.

Revenue from underwriting stocks and bonds more than doubled to $2.05 billion, well beyond analysts’ average estimate of $1.3 billion. Fees from advising on deals for companies fell 11% to $686 million.

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