Goldman Gains as Q2 Earnings Beat Estimates, Boosts Dividend 33.3%
Shares of the company gained 1.6% in the pre-market trading on better-than-expected results.
The volatile market lifted Goldman's net revenues in Equities by 36% year over year to $4.3 billion. Fixed income, currency and commodities trading revenues rose 9% year over year to $3.5 billion. Investment Banking (IB) fees rose 26% year over year to $2.2 billion in the quarter, driven by significantly higher net revenues in Advisory, reflecting strength in the Americas and EMEA.
Goldman's results benefited from solid growth in the Global Banking & Markets division. Yet, increased expenses and provision were concerning.
Net earnings (GAAP basis) of $3.7 billion increased 22% from the prior-year quarter.
GS's Revenues & Expenses Increase
Net revenues rose 15% to $14.6 billion for the quarter from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate by 8.1%.
Total operating expenses increased 8% year over year to $9.2 billion.
Provision for credit losses was $384 million, up 36% from the prior-year quarter.
Goldman's Quarterly Segmental Performance: Mixed Bag
The Asset & Wealth Management division generated revenues of $3.8 billion in the reported quarter, down 3% year over year. The decrease reflected significantly lower net revenues in equity investments and debt investments, partially offset by higher management and other fees.
Firmwide assets under supervision were $3.3 trillion, up 12.2% from the prior-year quarter.
The Global Banking & Markets division recorded revenues of $10.1 billion, which increased 24% year over year. The improvement was driven by a rise in net revenues in Equities (including an increase in net revenues in financing) and strong performances in Fixed income, currency and commodities.
The Platform Solutions division's revenues were $685 million, up 2% year over year.
GS's Capital Ratio Declines
As of June 30, 2025, the standardized Common Equity Tier 1 capital ratio was 14.5%, down from 14.8% as of June 30, 2024.
The company's supplementary leverage ratio was 5.3%, down from 5.4% in the year-ago quarter.
Goldman's Capital Distribution Update
In the reported quarter, GS returned $3.96 billion in capital to common shareholders. This included $3 billion in share repurchases and common stock dividends of $957 million.
The company cleared the 2025 Fed stress test and increased the quarterly dividend to $4.00 per common share, marking an increase of 33.3% from the prior payout. The dividend will be paid out on Sept. 29, 2025, to common shareholders of record on Aug. 29, 2025.
Our View on GS
Goldman's focus on IB and trading businesses, along with strong deal-making pipelines, will likely support the top line. Active client engagement and a solid position in announced and completed mergers and acquisitions globally are likely to act as tailwinds in the upcoming period. However, a rise in expenses poses near-term concerns.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
Currently, GS carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Other Investment Banks
Raymond James Financial Inc. RJF is slated to report quarterly results on July 23. The Zacks Consensus Estimate for RJF's fiscal third-quarter 2025 earnings has been revised upward to $2.37 per share over the past seven days. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
LPL Financial Holdings Inc. LPLA is expected to report quarterly results on July 31. The Zacks Consensus Estimate for LPLA's second-quarter 2025 earnings has been revised downward to $4.26 per share over the past seven days.
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