Goldman Sachs share price slips despite results exceeding expectations

 
Lucy White
Dow Closes Week Above 9,000
Goldman Sachs saw revenues increase by 12 per cent in the first half compared to a year prior (Source: Getty)

Investment bank Goldman Sachs is set for a topsy-turvy start to the day, after its share price slipped despite results which exceeded analyst expectations.

The Wall Street giant's share price was down just over one per cent in pre-market trading, as it announced net revenues had dropped from $8.03bn in the first quarter of 2017 to $7.89bn in the second quarter.

The firm regained a little ground at the open, but its share price was down again 0.95 per cent at the time of writing.

Despite this disappointment, the first half of the year saw net revenues of $15.91bn – 12 per cent higher than a year prior.

Earnings per share reached $3.95, up from $3.72 in the second quarter of last year but down from the $5.15 seen in the previous quarter.

“A mixed operating environment persisted into the second quarter as conditions continued to support underwriting and mergers and acquisitions, while constraining certain market-making activity,” said Lloyd Blankfein, Goldman Sachs' chairman and chief executive.

Analyst expectations

Despite the slips in revenues, Goldman's results did exceed analyst expectations. According to a poll of analysts by Thomson Reuters, earning per share were predicted to reach just $3.39.

Similarly, revenues managed to top the $7.521bn expected by analysts.

The breakdown

Goldman's results come soon after it was ranked as top advisor on worldwide announced and completed mergers and acquisitions for the year-to-date, according to Mergermarket data.

However, net revenues in Goldman's investment banking division hit $1.73bn for the second quarter of 2017, three per cent lower than the second quarter of 2016.

Net revenues in the financial advisory sector were $749m, six per cent lower than the second quarter of 2016, which the firm said was “reflecting a decrease in industry-wide completed mergers and acquisitions”.

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Meanwhile, Goldman's debt underwriting produced its third highest quarterly performance with net revenues of $721m.

The equities business generated its highest quarterly results in two years with net revenues of $1.89bn. Investment management generated record quarterly management and other fees of $1.28bn, as assets under supervision increased to a record $1.41 trillion.

Investing and lending also produced strong results, as net revenues hit $1.58bn for the second quarter of 2017 – 42 per cent higher than the second quarter of 2016 and eight per cent higher than the first quarter of 2017.

Yet net revenues in institutional client services were $3.05bn for the second quarter of 2017, a drop of 17 per cent from the second quarter of 2016 and nine per cent from the first quarter of 2017.

Read more: Goldman Sachs chief executive Lloyd Blankfein's pay fell to $22m in 2016

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