Goldman Sachs Earnings Miss Street Forecasts As Deal Fees Slump

Updated at 8:30 am EDT

Goldman Sachs Group  (GS) - Get Free Report posted weaker-than-expected second quarter earnings amid a slump in global dealmaking but boosted its quarterly dividend thanks in part to modestly firmer overall revenues. 

Goldman said earnings for the three months ending in June were pegged at $1.07 billion, or $3.08 per share, down 60% from the same period last year and firmly shy the Street consensus forecast of $3.18 per share. Group revenues, Goldman said, fell 8% to $10.9 billion but topped analysts' forecasts of an $10.84 billion total.

Investment banking revenues fell 20% from last year to $1.43 billion, Goldman said. Fixed income revenues were down 26% to $2.71 billion, while equity trading revenue nudged higher, to $3 billion, just ahead of Street forecasts.

Global dealmaking was pegged at $1.3 trillion over the first half of this year, down 38% from 2022 levels, a tally that, outside of the pandemic, was the lowest in a decade. Second quarter deals, however, were up 22.6% when compared to the first three months of the year, according to Dealogic data.

Goldman also set-aside $615 million to cover potential losses in its credit and loan divisions, down 8% from the $677 million provision in booked over the second quarter of last year. The bank also increased its regular dividend by 10%, to $2.75 per share, starting in the current quarter.

“This quarter reflects continued strategic execution of our goals. Global Banking & Markets delivered solid returns in an environment with cyclically low activity levels and we remained #1 in completed M&A – a testament to our world-class client franchise," said CEO David Solomon. 

"Asset & Wealth Management produced record AUS, record Management and other fees and record net revenues in Private banking and lending," he added. "I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders.” 

Goldman Sachs shares were marked 1.56% lower in pre-market trading immediately following the earnings release to indicate a Wednesday opening bell price of $332.00 each.

Goldman's return on equity, a measure of overall performance, fell to 4% for the quarter, the weakest of the big Wall Street banks, and 7.8% for the first half of the year.

The bank also booked a $504 million writedown on home improvement lender Greensky, which it bought for $1.7 billion in 2021.