Goldman Sachs (GS) reported that its second quarter profits soared 150% from a year ago as investment banking surged, the latest signal that Wall Street is warming up after a two-year drought.
Net income was $3.04 billion, which beat analyst expectations. Its total revenue of $12.73 billion also rose 17% from a year ago.
The result gives CEO David Solomon more momentum following his most challenging year ever as boss.
A year ago, he was grappling with a dealmaking slump, a costly exit from consumer banking, and a series of high-profile departures from the firm.
Goldman’s stock rose more than 2% Monday, and it has climbed 28% year to date.
“We are in the early innings of a capital markets and M&A recovery, and while certain transaction volumes are still well below their tenure averages, we remain very well positioned to benefit from a continued resurgence of activity,” Goldman’s Solomon said during a conference call with analysts.
Goldman is the latest big bank to demonstrate it is benefiting from an investment banking rebound.
On Friday, JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) each posted sizable jumps in the revenue stream compared with the second quarter of last year.
The revival provided a boost to those banks at a time of rising challenges for their Main Street consumer operations.
Goldman is even more reliant on Wall Street for its performance.
Its investment banking fees rose 21% from a year ago, to $1.7 billion, led by big jumps in debt and equity underwriting. Advisory fees were also up, by 7%.
Its investment banking performance did drop when compared to the first quarter. Fees dipped by 17%.
What propelled its second quarter earnings higher than a year ago was Goldman’s better-than-expected trading results as well as its increased focus on asset and wealth management.
Goldman’s fixed-income trading revenue rose 17% year over year, while asset and wealth management revenues increased 27%.
The firm also touched on its decision to challenge results from the Federal Reserve’s latest annual stress test, which called for an increase to Goldman’s stress capital buffer.
In light of that expected increase, CFO Denis Coleman said the firm planned to moderate its pace of stock buybacks compared to the most recent quarter.
But Solomon said the firm doesn’t think the results reflect Goldman’s current risk profile.
“Given this discrepancy, we are engaging with our regulators to better understand its determinations,” he added.
Correction: A previous version of this article misspelled the first name of Goldman Sachs CFO Denis Coleman. We regret the error.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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