Goldman Sachs, the highest tier of Wall Street banks, posted earnings this morning. This quarter, the Goldman Sachs Group brought in net revenues of $9.13 billion, and net earnings of $2.04 billion, exceeding expectations. Goldman's estimates were floated around $3.07 per share and revenue of $7.98 billion.
Diluted earnings per common share were $4.10 compared with $3.70 for the second quarter of 2013 and $4.02 for the first quarter of 2014. Annualized return on average common shareholders’ equity was 10.9% for both the second quarter of 2014 and the first half of 2014.
Goldman was up 2.05 percent to 170.43 in pre-market trading. Lloyd C. Blankfein, Chairman and Chief Executive Officer, said in a statement:
We are pleased with our results for the quarter in the context of mixed operating conditions during the period. This performance was driven by the diversity, strength and breadth of our global client franchise. Good client activity in Investment Banking and Investment Management as well as a better environment for our Investing & Lending activities helped offset less favorable conditions for Institutional Client Services.”
On the press call Goldman noted this record setting quarter was spurred by their "adaptability" and "nimbleness" as a company. They also encouraged the work of their analysts, who they boasted had the best "connectivity with clients" in their environment.
As for compensation for these employees they praised, Goldman is paying them more. In the past, they were aiming to decrease pay because compensation is Goldman's largest cost. However, this quarter compensation was up six percent from 2013.
While it was a successful quarter overall, trading revenue for Goldman plummeted about 12 percent, which was predicted. Citibank also reported equity trading sank yesterday, due in large part to the turmoil in Ukraine, which led to a $100 million decrease. For Goldman, their trading revenue decreased due to the stable financial market. When the market is turbulent, traders can earn more on the dramatic ups and downs. However, when the market is quiet, larger earnings are harder to post.