Goldman Sachs thrived despite the fact that stocks plummeted during the first half of 2022. The environment for banks was particularly challenging.
But Goldman Sachs was helped by a boost in its massive bond trading unit. Revenue for fixed income trading surged as yields rose thanks to interest rate hikes from the Federal Reserve.
Goldman Sachs also said that its consumer and wealth management unit, which includes the digital bank Marcus, posted record revenue of nearly $2.2 billion in the quarter, up 25% from the same period last year.
“Despite increased volatility and uncertainty, I remain confident in our ability to navigate the environment,” said Goldman Sachs CEO David Solomon in the bank’s press release.
Consumer businesses are strong despite recession fears
The consumer divisions of the biggest banks continue to perform well, despite all the worries about inflation and a possible recession.
Solomon noted during a conference call with analysts that “we don’t see significant indications of credit deterioration” in its consumer business, even though “it’s certainly an environment where people are more cautious about risk.”
Bank of America also reported healthy results from its consumer unit. BofA CEO Brian Moynihan told analysts during a conference call Monday that the bank is “mindful of the debate about a future recession, and we have prepared the company across the last decade-plus through responsible growth to be prepared for that.”
“But as we see our current customer base, we are not seeing them slow down in terms of their activities,” Moynihan added.
Many big banks raised their dividends following the stress test results. Goldman Sachs boosted its quarterly payout by 25%.
Despite that, shares of Goldman Sachs are still down more than 20% this year. And the broader market’s struggles has been bad news for Goldman Sachs employees. The bank said Monday that its compensation and benefits expenses, the so-called bonus pool, was down more than 30% from a year ago.
Goldman’s Chief Financial Officer Denis Coleman also said on the conference call with analysts that the bank is planning to slow the pace of new hires due to the “challenging operating environment.”