In its second quarter of the year, Goldman Sachs reported earnings that surpassed expectations. The earnings expectations were beaten on expense cuts and an upsurge in bond trading.
Goldman Sachs group was popularly assumed to be destined for a down quarter due to the increased risk perceived by investors. In addition to the perception of increased risks, other factors in the belief that Goldman would be down included the slowed down corporate merger, dwindling acquisition activity, and a stalled public offering market. The low expectations for Goldman’s Q2 earnings were deepened further by an ongoing aura of uncertainty created by Brexit.
Against the writing on the wall, Goldman Sachs Group has undertaken a strategy of shrinking down and building its foundation from the bottom-up. The shrinking strategy worked in the investment bank’s favor, as on Tuesday morning, the second quarter report showed far higher earnings than many had initially anticipated.
Goldman Sachs’ revenue reports were $7.93 billion and $1.82 billion profit, at $3.72 a share; by contrast, the expectations were for $7.5 billion in revenue at $3.72 per share.
While the earnings are still 13% lower than the revenues reported at the same time last year, the rise in profitability still took many investors by surprise. Goldman Sachs CEO Lloyd C. Blankfein credited the investment bank’s successful Q2 earnings to a strategy focused on serving clients across a “diversified franchise”.