BLBG: Goldman Sachs Posts Record Profit, Beating Estimates on Trading
July 14 (Bloomberg) -- Goldman Sachs Group Inc.’s second- quarter profit exceeded analysts’ estimates as record trading and stock underwriting led the company to its highest quarterly profit.
Net income in the three months ended June 26 was $3.44 billion, or $4.93 a share, the New York-based bank said today in a statement. That surpassed the $3.65 per-share average estimate of 22 analysts surveyed by Bloomberg and compared with $2.09 billion, or $4.58 per share, in last year’s second quarter.
Chief Executive Officer Lloyd Blankfein, 54, made Goldman Sachs the highest-paying Wall Street firm in history before last year’s credit freeze led him to convert to a bank, accept government funds and report the first quarterly loss as a public company. This year Goldman Sachs has issued new stock, returned $10 billion to the U.S. Treasury and reaped fees from selling stocks and bonds.
“Goldman’s got a sweet spot in here, they were the go-to players,” said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, which oversees $13.8 billion including Goldman shares, before earnings were released. “For the time being, they’ve got kind of an open playing field all to themselves.”
Goldman Sachs, the fifth-biggest U.S. bank by assets, climbed 77 percent in New York Stock Exchange trading this year to close yesterday at $149.44. That’s almost triple the low of $52 on Nov. 20.
Goldman Bonds
The difference between the yield on Goldman Sachs’s bonds and U.S. Treasuries, known as the spread, has narrowed this year, indicating investors have regained comfort in lending to the company. The spread on $3.2 billion of 5.95 percent senior unsecured notes maturing in 2018 was 268 basis points yesterday, compared with 472 basis points on March 31. A basis point is one-hundredth of a percentage point.
The results follow the U.S. bank-rescue effort that funneled about $200 billion from taxpayers to financial firms, including $10 billion to Goldman Sachs, after the bankruptcy of Lehman Brothers Holdings Inc. and near-failure of American International Group Inc.
Investors will receive earnings reports later this week from JPMorgan Chase & Co., Citigroup Inc., and Bank of America Corp. Morgan Stanley, which was the second-biggest U.S. securities firm behind Goldman Sachs before both firms converted to banks last year, said it will report next week.
