Goldman Sachs (GS 226.46, -2.80) has given up 1.2% despite beating earnings expectations for the second quarter.
The investment banking giant reported above-consensus second quarter earnings of $3.95 per share on a 0.6% year-over-year uptick in revenue to $7.89 billion, which also exceeded expectations.
Annualized return on average common shareholders' equity was 8.7% during the second quarter, matching last year's rate of return. Through the first half of 2017, annualized return on average common shareholders' equity hit 10.1%, up from 7.5% one year ago.
Goldman's debt underwriting unit produced its third best quarterly performance on record, generating revenue of $721 million. On a somewhat related note, the company ranked first in worldwide announced and completed mergers & acquisitions and common stock offerings for the year to date.
Common Equity Tier 1 ratio, calculated in accordance with the standardized approach, increased to 13.9% from 13.7% one year ago. Calculated in accordance with the Basel III advanced approach, Common Equity Tier 1 ratio increased to 12.5% from 12.2%.
Investment Banking net revenue declined 3.0% to $1.73 billion, but Goldman's transaction backlog increased when compared with the previous quarter and the same quarter one year ago.
Institutional Client Services net revenue declined 17.0% to $3.05 billion, due to lower volatility. Fixed Income, Currency, and Commodities Client Execution revenue fell 40.0% to $1.16 billion due to lower revenues in interest rate products, commodities, credit products, and currencies. This was partially offset by higher mortgage revenue.
Investing & Lending net revenue jumped 42.0% year-over-year to $1.58 billion. Revenues in equity securities spiked 88.0% to $1.18 billion. Net revenues in debt securities and loans fell 18.0% to $396 million, due to lower net gains from investments in debt instruments.
Investment Management revenue rose 13.0% to $1.53 billion. Higher management and other fees, resulting from higher average assets under supervision, and higher incentive fees drove the increase. Investment Management fees hit a quarterly record of $1.28 billion while assets under supervision grew by $33.00 billion to $1.41 trillion.