Goldman Sachs put its larger “bulge bracket” rival JP Morgan in the shade yesterday as a revival in floats boosted profits at the Wall Street giant.
Both banks were hit by lower than expected bond-trading volumes, though the decline was smaller than had been feared by analysts. While net profits at JP Morgan fell 8 per cent to $5.99bn (£3.5bn) in the second quarter, Goldman managed a 5 per cent rise to $1.95bn.
Record underwriting revenues from a glut of floats boosted Goldman, as well as increasing the profits of its private equity arm, which cashed in as companies went to market.
While revenues from fixed-income and equity markets slumped by 15 per cent at JP Morgan, its earnings still beat analysts’ expectations.
“Despite continued industry-wide headwinds in markets and mortgages, the firm has continued to deliver a strong underlying performance,” said Jamie Dimon, JP Morgan’s chairman and chief executive, adding that there had been strong growth in consumer and community banking deposits, bank card sales and business loans.
Mr Dimon said: “The corporate and investment bank saw strong performance in fees… commercial banking clients generated record investment banking revenues in the first half of the year. Asset management had excellent performance across all measures.”
Mr Dimon, who is being treated for throat cancer, told a conference call that he was feeling “great” and would remain involved with the company’s operations during his treatment.
Goldman Sachs, meanwhile, said net revenues from fixed-income, currency and commodity trading fell by about 10 per cent to $2.22bn, although analysts had anticipated a bigger fall.
The bank was boosted by a 46 per cent rise in net revenues from its investing and lending division to $2.07bn, as well as strong performances in investment banking, mergers and acquisitions, and investment management.
“We are pleased with our results for the quarter in the context of mixed operating conditions during the period,” said Lloyd Blankfein, its chairman and chief executive.
He added: “This performance was driven by the diversity, strength and breadth of our global client franchise. Good client activity in investment banking and investment management, as well as a better environment for our investing and lending activities, helped offset less favourable conditions for institutional client services.”