NEW YORK – Goldman Sachs Group Inc. reported blockbuster earnings Tuesday, as a company that received government assistance just last year returned to profitability faster than many experts predicted.
The New York investment banking concern parlayed a big jump in securities-trading profits into second-quarter net income of $3.44 billion, or $4.93 cents a share. That easily surpassed analyst estimates of $3.65 a share.
Goldman’s performance topped many of the most optimistic forecasts – even surpassing the higher projections that some analysts made in recent days.
The results further cemented Goldman’s reputation as Wall Street’s premier investment banking company, especially at a moment when many of its rivals are hobbled by the aftermath of last year’s financial crisis.
However, its profit also rekindled a debate about whether companies such as Goldman have benefited unduly from government bailouts even as American workers and consumers struggle with the lingering effects of the recession.
Goldman’s results came largely from record trading profits in stock, bond and other securities.
Revenue from trading and principal investments surged to $10.8 billion, almost double the amount a year ago and 51 percent higher than in the first quarter.
Goldman benefited from the overall recovery in financial markets, the company’s willingness to take on risk and reduced competition from other investment banks.
Companies across Wall Street have been helped in the past three months by a significant rebound in global stock and bond markets, which increases the value of securities on their books.
Beyond that, Goldman seized on the travails of rivals to strengthen its grasp in key markets, experts said. Bear Stearns Cos. and Lehman Bros. Holdings collapsed during the financial maelstrom, while others such as Morgan Stanley have reduced their exposure to risky assets.
Goldman suffered fewer losses during the housing meltdown, giving it leeway to gain when financial conditions improved.
The bottom line, analysts said, is that Goldman was able and willing to take risks that others couldn’t.