Goldman Sachs’s net income more than doubled in the second quarter, to $3.04 billion from $1.2 billion a year earlier, the bank disclosed Monday.
From the numbers, that’s as much a statement on where the bank is now as it is about the obstacles it faced 12 months ago. Goldman took $989 million in impairment charges during 2023’s second quarter — nearly half of that from real estate investments, and the rest connected to home improvement lender GreenSky, which the bank has since sold.
Net revenue at the bank jumped 17% year over year to $12.7 billion. Trajectory was sharper in particular units: Asset and wealth management, for example, saw revenue pop by 27% to $3.9 billion.
Investment banking fees jumped 21%. That percentage may pale in comparison to the likes of JPMorgan Chase, which reported a 46% second-quarter increase, and Citi, whose fees saw a 60% jump.
Goldman CFO Denis Coleman, on Monday’s earnings call, noted that the bank still had a No. 1 market share for mergers, according to CNBC.
Even the bank’s losses seemed to fall significantly from this time last year. Goldman reported a $282 million provision for credit losses in the second quarter. That’s 54% less than in April through June last year.
On a more molecular level, Goldman took a $58 million charge related to its credit card business with General Motors. GM is reportedly in talks to replace Goldman with Barclays as its partner. Apple also is reportedly looking to end its credit card partnership with Goldman.
If enthusiasm seems muted at Goldman, that might be from the top down.
"We are pleased with our solid second quarter results and our overall performance in the first half of the year, reflecting strong year-on-year growth in both Global Banking & Markets and Asset & Wealth Management," CEO David Solomon said Monday. (Global banking and markets reported a 14% jump in revenue Monday.)
Some of the tension likely derives from a still-stinging stress test result, in which the Federal Reserve set a 6.4% stress capital buffer for the bank — and a 13.9% common equity tier 1 requirement.
“The year-over-year increase in our stress capital buffer does not seem to reflect the strategic evolution of our business and the continuous progress we’ve made to reduce our stress loss intensity, which the Federal Reserve had recognized in our last three tests,” Solomon said during Monday’s call, according to Bloomberg. “Given this discrepancy, we are engaging with our regulators to better understand its determinations.”
Indeed, Goldman challenged its stress test result in a letter to the Fed, the Financial Times reported Sunday, citing people familiar with the matter.
The Fed has allowed banks to dispute stress test results since 2020. But although eight, including Goldman once before, have written appeals disagreeing with the outcomes, the Fed has yet to budge on its initial assessments.
The Fed is expected to recheck its test of Goldman for any errors and to disclose its verdict on the appeal in August, according to the Financial Times.
