Goldman posts best stock-trading quarter in Wall Street history

Goldman has been trying to expand its trading business, one of Wall Street’s most profitable, against rising competition from Morgan Stanley and market makers such as Jane Street and Citadel Securities. Bloomberg

Goldman Sachs Group Inc.’s stock traders posted the largest revenue haul in Wall Street history, as volatility sparked by the Trump administration’s trade war spurred a second straight record quarter for the unit.

At $4.3 billion, equity-trading revenue for the second quarter was about $600 million more than what analysts were expecting and $100 million above the first-quarter total, according to a statement Wednesday. That also pushed profit above expectations for the period.

Trading desks across Wall Street benefited from the tariff upheaval. But while Goldman’s stock-trading revenue climbed from three months earlier, that figure slipped at Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co.

Goldman has been trying to expand its trading business, one of Wall Street’s most profitable, against rising competition from Morgan Stanley and market makers such as Jane Street and Citadel Securities.

Goldman Sachs shares, up 23% this year through Tuesday, rose 1.4% at 7:47 a.m. in early New York trading.

“The economy and markets are generally responding positively to the evolving policy environment,” Chief Executive Officer David Solomon said in a presentation. “But as developments rarely unfold in a straight line, we remain very focused on risk management.”

The firm’s fixed-income traders reported $3.47 billion of revenue, supported by record results in FICC financing, while investment-banking fees jumped to $2.19 billion. Both were well above the consensus of analyst estimates compiled by Bloomberg.

In particular, Goldman’s bankers posted a 71% gain in financial-advisory revenue, driven by fees from mergers and acquisitions. Equity underwriting was flat, while debt underwriting fell slightly on a decrease in leveraged-finance activity.

Total management fees in asset and wealth management — a key growth area for the bank — rose 11% compared to a year earlier, though net revenue dipped slightly to $3.78 billion.

Earlier this month, Goldman Sachs lifted its dividend by a third to $4 following Federal Reserve stress tests that regulators made easier to clear by softening some requirements.

Shareholders are letting Goldman’s executives get higher payouts, too. In April, they voted to approve a pair of $80 million retention bonuses for Solomon and President John Waldron, who’s widely seen as the favorite to be the next CEO.

The bank is also squeezing as much out of every dollar as it can, pushing a multiyear plan to lower operational costs. It trimmed headcount by 700 people to 45,900, and is moving managers and partners to cheaper “strategic locations,” including Dallas, Warsaw and Bengaluru.