Goldman Sachs Group Inc. (NYSE:GS) has reported the steepest drop in second quarter trading revenues compared to other US banks so far, although its profits saw a surprise increase over the period.
The fifth largest US bank by assets posted earnings of US$3.95 a share, beating consensus expectations for US$3.39, down from US$3.72 a year earlier.
Overall revenue came in at US$7.89bn, down from US$7.93bn in the second quarter of last year, but still beat expectations for US$7.52bn.
READ: Goldman Sachs shares slide as trading business takes a hit
However, the bank reported a 17% drop in trading revenues, the steepest fall of any big bank to report second-quarter earnings so far. Trading revenue fell 14% at JP Morgan Chase & Co (NYSE:JPM), 9% at Bank of America (NYSE:BAC) and 7% at Citigroup Inc (NYSE:C).
Revenue from trading bonds and other fixed-income products dropped by 40%, but it posted its best quarter for two years in equity trading, with revenues jumping by 17% from a year ago to US$1.89bn.
'Investing and Lending' segement bucks trend
Goldman's profit surprise came from a segment it calls "Investing and Lending," which is not a distinct operating unit but encompasses loans and equity investments that it makes in various parts of its business.
Revenue in that area increased by 42% year-over-year, mostly from higher valuations for Goldman's stakes in private companies, many of them technology start-ups.
But Goldman is still heavily dependent on arranging big, complex trades and deals for corporate and institutional clients and demand for these services has flagged as the market awaits signs from Washington on tax and regulatory reforms in the banking sector.
In pre-market trading, Goldman's shares were down 0.6% to $227.82 in premarket trading.