Goldman Sachs Sets Series of Records on Tariff Swings

Business|Goldman Sachs Sets Series of Records on Tariff Swings

How well is it going at Goldman Sachs? When briefing reporters about its quarterly earnings on Wednesday, a bank executive twice paused to list the various departments that had taken in a record haul.

There were record quarterly revenues in units covering bond trading, stock trading and in the bank’s equities business overall, a category that includes a range of complex financial maneuvers the New York investment bank helps clients perform for a fee.

Overall, Goldman earned $3.7 billion in the second quarter, far surpassing forecasters’ expectations. Here’s how Goldman, and other big banks that reported banner results this week, did it.

Turmoil in trading

Goldman spent years trying to build a consumer bank, but pulling back to refocus on its traditional corporate clients is paying off. The lender’s investment bank, which advises companies on mergers, debt offerings and the like, produced better-than-expected figures.

The executive who briefed reporters Wednesday under the condition of anonymity per company policy said the bank was a particular beneficiary when there was uncertainty in the world. That is partly because traders tend to be more active when markets are whipsawing.

David M. Solomon, Goldman’s chief executive, said in a statement: “Developments rarely unfold in a straight line.”

A day before, JPMorgan Chase’s finance chief said that the bank’s corporate clients “sort of accepted that they just have to get through this,” after that bank also reported bumper earnings.

A rival stumbles

Bank of America also reported earnings on Wednesday. That bank, too, recorded an uptick in trading, but one all-important metric disappointed investors: “Net interest income,” or the money that the Main Street lender makes from the difference between what it pays depositors and what it makes from loans.

Many analysts expected a higher figure than the $14.7 billion the bank was able to produce.

A bank spokeswoman declined to comment.

Tight-lipped on President Trump

Importantly, the strong banking results have mostly come from an increase in trading — not in mergers or other areas of investment banking that have slumped amid the uncertainty over the Trump administration’s trade policy, antitrust stance and more. For the second consecutive quarter, Goldman’s representatives avoided directly commenting on tariffs or other policies from the White House.

That contrasts with JPMorgan’s Jamie Dimon, who on Tuesday waded directly into the simmering argument over the Federal Reserve’s chair, Jerome H. Powell, backing the central bank chief in the face of relentless criticism by Mr. Trump.

A word from Morgan Stanley

Morgan Stanley typically reports its quarterly results later than other big banks, but on Wednesday it joined the party.

While it, like the others, revealed better-than-expected results in its trading business, aspects of its investment bank were slow compared with rivals, and Morgan Stanley’s shares dropped in early trading.