(Adds details on trading volumes, other banks, analyst comment,
updates stock price)
By Anil D'Silva and Lauren Tara LaCapra
July 15 Goldman Sachs Group Inc posted a
5 percent rise in quarterly profit, spurred by higher revenue
from stock underwriting and a smaller decline in fixed-income
trading than many on Wall Street had predicted.
The bank's stock was up 0.7 percent at $168.17 on Tuesday
morning on the New York Stock Exchange.
Goldman posted net income for shareholders of $1.95 billion,
or $4.10 per share, in the three months ended June 30, up from
$1.86 billion or $3.70 per share in the same period a year
Analysts on average had expected earnings of $3.05 per
share, according to Thomson Reuters I/B/E/S.
Institutional investors have been shying away from the bond
market because of a lack of strong opinions about interest rates
and currency moves.
Rival banks Citigroup Inc and JPMorgan Chase & Co
said a pickup in trading volume in June helped offset
slowness in April and May.
"The sustainability of that trend is in question," said
Brian Kleinhanzl, a research analyst at Keefe, Bruyette & Woods
who rates Goldman a "market perform."
JPMorgan said on Tuesday that the June improvement in bond
trading has not carried over to July.
Goldman's net revenue from fixed-income, currency and
commodity trading for customers, known as FICC, fell 10 percent
to $2.22 billion.
Analysts had expected a bigger decline. Bernstein Research
analyst Brad Hintz had estimated $1.8 billion in fixed-income
trading revenue for the quarter.
In May, JPMorgan Chase & Co and Citigroup forecasted
declines in overall trading revenue closer to 20 percent for the
second quarter, compared with the same period last year.
Goldman's net revenue in its investing and lending division
jumped 46 percent to $2.07 billion. This included net gains of
$1.25 billion from investments in equities.
The bank was also helped by better results in investment
banking, where it ranked No. 1 in mergers and acquisitions, as
well as equity underwriting, for the first half of 2014,
according to Thomson Reuters data.
In equity underwriting, the bank's revenue rose 47 percent
to $545 million, helped by Goldman's work on deals including the
initial public offering of Ally Financial.
Investment banking revenue overall, which includes M&A, debt
underwriting and stock underwriting, rose 15 percent to $1.78
Goldman executives often say that investment banking is the
center of its broader franchise, because those clients also
generate revenue for its trading, investment management and
The bank makes most of its money from trading and investing
in capital markets. This sets it apart from JPMorgan Chase & Co,
Citigroup and Bank of America Corp, which have big
consumer and corporate lending businesses.
JPMorgan, the biggest U.S. bank by assets, on Tuesday
reported an 8 percent decline in second-quarter profit as a
pullback in trading of bonds and currencies by big institutions
hit revenue in its securities trading business.
On Monday, Citigroup reported a 16 percent drop in trading
(Reporting by Anil D'Silva in Bangalore and Lauren Tara LaCapra
in New York; editing by Saumyadeb Chakrabarty, Dan Wilchins, and