Goldman Sachs Q2 Profit Misses Estimates; Boosts Dividend 10%

Goldman Sachs Group, Inc. (GS) reported Wednesday that profit for the second quarter plunged 62 percent from last year, reflecting higher provisions for bad loans, 8 percent drop in net revenues and 12 percent higher operating expenses. Earnings per share missed analysts’ expectations, while quarterly revenues topped it by a whisker.

“This quarter reflects continued strategic execution of our goals. Global Banking & Markets delivered solid returns in an environment with cyclically low activity levels and we remained #1 in completed M&A – a testament to our world-class client franchise,” said David Solomon, Chairman and CEO.

For the quarter, net earnings applicable to common shareholders plunged to $1.07 billion or $3.08 per share from $2.79 billion or $7.73 per share in the prior-year quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $3.18 per share for the quarter. Analysts’ estimates typically exclude special items.

Provision for credit losses for the quarter declined 8 percent to $615 million from $667 million last year, primarily reflecting net provisions related to the credit card and point-of-sale loan portfolios, driven by net charge-offs and growth, and individual impairments on wholesale loans.

Operating expenses were $8.54 billion for the second quarter, 12 percent higher than last year, reflecting an impairment of goodwill of $504 million related to Consumer platforms and impairments of approximately $485 million related to consolidated real estate investments.

Net revenues for the quarter declined 8 percent to $10.90 billion from $11.86 billion in the same quarter last year, reflecting lower net revenues in Global Banking & Markets and Asset & Wealth Management, partially offset by higher net revenues in Platform Solutions. Analysts expected revenue of $10.84 billion for the quarter.

Net revenues in Global Banking & Markets were $7.19 billion for the quarter, down 14 percent from the previous year.

Net revenues in Asset & Wealth Management were $3.05 billion, 4 percent lower than the prior year, reflecting significantly higher net losses in Equity investments, significantly lower Incentive fees and significantly lower net revenues in Debt investments.

Net revenues in Platform Solutions were $659 billion, 92 percent higher than last year, reflecting significantly higher net revenues in Consumer platforms.

On June 28, the Federal Reserve notified the firm of its stress capital buffer (SCB) of 5.5 percent, which will become effective on October 1, 2023, a reduction of 80 basis points from the current SCB.

On Monday, the Board of Directors of Goldman Sachs approved a 10 percent higher quarterly dividend of $2.75 per common share beginning in the third quarter of 2023, to be paid on September 28, 2023 to common shareholders of record on August 31, 2023.

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