Goldman Sachs advisory revenues skyrocket 83% year over year

The firm's investment banking business, including financial advisory, helped propel second-quarter revenues.

Goldman Sachs Group Inc.’s investment banking business propelled its second quarter earnings results reported Tuesday.

The Wall Street investment bank is on a roll this year as pandemic woes feel further away and deal-makers are ready to take advantage of the busy markets. Goldman Sachs’ investment banking unit produced its second highest revenue quarter ever of $3.6 billion, 36% higher than the second quarter of 2020 and 4% lower than the first quarter of 2021, the firm’s strongest revenue period on record.

Financial advisory revenues totaled $1.3 billion, an 83% increase compared with the prior year period. The increase reflected an “elevated number of deal closings in the quarter and the increasing market position of our business as we have expanded our client footprint,” Goldman Sachs Chief Financial Officer Stephen Scherr said during the earnings call.

Equity underwriting performance, in particular, continued to be strong as well, generating $1.2 billion in revenues amid elevated initial public offering activity, representing Goldman Sachs’ third consecutive quarter with revenues of over $1 billion. Notably, Goldman led over 160 IPOs year- to-date, more than in all of last year, Scherr said.

Additionally, environment, social and governance investing remained a focus of the market, particularly in Europe, with strong issuance volumes across sustainability link bonds, and loans. “We expect this trend to continue in future quarters,” Scherr said.

Wealth management revenues of $1.4 billion, 25% higher than the second quarter of 2020, included record management and other fees of $1.1 billion as assets under supervision increased to $672 billion. Private banking and lending revenues were $216 million, with loans to private wealth clients up $4 billion sequentially.

“We remain focused on synergies between our [Personal Financial Management] and [Private Wealth Management] franchises, where we continue to see referrals representing a significant opportunity,” Scherr said.

Goldman Sachs has revealed its plans to grow its Personal Financial Management unit via acquisitions, and the division’s CEO, Joe Duran, outlined how acquired firms can benefit from the referrals his firm provides, as well as its infrastructure and systems.

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“Our second quarter performance and record revenues for the first half of the year demonstrate the strength of our client franchise and our continued progress on our strategic priorities,” CEO David Solomon said in a statement. “While the economic recovery is underway, our clients and communities still face challenges in overcoming the pandemic.”

“But, as always, I am proud of the dedication and resilience of our people, who have worked tirelessly to help our clients navigate the ever-changing market environment,” Solomon said.

Goldman Sachs also reported profits grew for the quarter compared with the same period a year ago, earning nearly $5.5 billion on revenue of nearly $15.4 billion. The profits represent the second highest quarterly revenue ever, behind the first quarter of 2021 at $17.7 billion.