Goldman Sachs (GS $100.19 +2.51) reported second quarter earnings of $1.78 per share, $0.60 better than the Capital IQ consensus of $1.18, while revenues fell 9.0% year/year to $6.63 billion versus the $6.06 billion consensus. Investment Banking Net revenues in Investment Banking were $1.20 billion, 17% lower y/y and 4% higher q/q. Net revenues in Financial Advisory were $469 million (-26% y/y), reflecting a decline in industry-wide completed mergers and acquisitions. Net revenues in the firm's Underwriting business were $734 million (-9% y/y). Net revenues in equity underwriting were significantly lower y/y due to a decline in industry-wide activity. Net revenues in debt underwriting were higher compared with the second quarter of 2011, reflecting higher net revenues from investment-grade and commercial mortgage-related activity, partially offset by lower net revenues from leveraged finance activity. Institutional Clients Net revenues in Institutional Client Services were $3.89 billion, 11% higher y/y and 32% lower q/q. Net revenues in Fixed Income, Currency and Commodities Client Execution (FICC) were $2.19 billion, 37% higher y/y, reflecting higher net revenues in mortgages and commodities compared with difficult market-making conditions during the second quarter of 2011. Net revenues in Equities were $1.70 billion, 12% lower y/y, primarily due to lower net revenues in equities client execution, reflecting significantly lower net revenues in derivatives. Valuation/Balance Sheet Firm's Tier 1 capital ratio under Basel 1 was 15.0% and the firm's Tier 1 common ratio under Basel 1 was 13.1% as of June 30, 2012. As of June 30, 2012, total capital was $239.85 billion. Book value per common share was $137.00 and tangible book value per common share was $126.12, both approximately 2% higher compared with the end of the first quarter of 2012. Book value and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 496.4 million at period end. Total assets were $949 billion as of June 30, 2012, compared with $951 billion as of March 31, 2012. Level 3 assets were $47 billion as of June 30, 2012, compared with $48 billion as of March 31, 2012 and represented 4.9% of total assets. Investment and Lending Net revenues in Investing & Lending were $203 mln for the second quarter of 2012. Investing & Lending net revenues were negatively impacted by a decrease in global equity prices and generally wider credit spreads.

Results for the second quarter of 2012 included a loss of $194 million from the firm's investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC) and net losses of $112 million from other investments in equities, reflecting losses in public equities, largely offset by gains in private equities. Compensation The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) was $2.92 billion for the second quarter of 2012, a 9% decline y/y. The ratio of compensation and benefits to net revenues for the first half of 2012 was 44.0%.