Goldman Sachs back on top as profits double

Tim Wallace
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ARNINGS more than doubled at Goldman Sachs in the last year, the investment bank revealed yesterday, as the growing economy sent more business its way.

It made $1.86bn (£1.23bn) in the second quarter, up from $927m in the same period of 2012.

Net revenues jumped 30 per cent to $8.61bn, far outstripping the 14 per cent rise in operating expenses.

Part of that came from restraint on pay – the ratio of pay to revenue fell from 44 per cent in the first half of 2012 to 43 per cent so far in 2013.

Investment banking revenues rose 29 per cent to $1.55bn, with a 55 per cent rise in equity underwriting and a 40 per cent jump in debt underwriting revenue. Fixed income, currency and commodities saw a 12 per cent rise in revenues to $2.46bn, while investment management held steady at $1.33bn.

“Improving economic conditions in the US drove client activity and the strength of our global client franchise allowed us to deliver positive performance across a number of our businesses,” said CEO and chairman Lloyd Blankfein.

However, the bank’s shares fell 1.44 per cent as return on equity came in at 10.5 per cent, above the 10 per cent cost of capital but a fraction of pre-crisis levels. Analysts fear the bank may struggle to maintain strong profit growth in the face of tough new capital rules.

The bank declined to reveal its leverage ratio, a measure of lending relative to capital, despite growing expectations of tighter rules.