The Goldman Sachs Group, Inc. reported improved earnings for the second quarter.

The Wall Street investment bank reported earnings of US$2.33 billion, or US$4.93 a share, up from US$2.31 billion, or US$4.78 a share, a year earlier.

The firm generated record diluted earnings per common share of US$11.61 for the first half of the year, 18% higher than its previous record.

Net revenue fell 0.6% to US$10.18 billion from US$10.24 billion in the second quarter a year ago.

Investment Banking produced record quarterly net revenues of US$1.72 billion, up 13%, and the division ended the quarter with its transaction backlog at a record level. Equities generated its second highest quarterly net revenues of US$2.50 billion, reflecting strength across all major businesses.

Asset Management generated record management and other fees of US$1.04 billion. Assets under management increased 28% from a year ago to a record US$758 billion, with net asset inflows of US$18 billion during the quarter. Securities Services achieved record net revenues of US$757 million, 15% higher than its previous record.

Not all divisions were reporting record, or near-record revenues however. Net revenues in Trading and Principal Investments were US$6.65 billion, 6% lower than the second quarter of 2006 and 29% lower than the first quarter of 2007. Revenues in Fixed Income, Currency and Commodities were US$3.37 billion, 24% lower than the second quarter of 2006, primarily reflecting lower net revenues in commodities and weak results in mortgages, principally attributable to continued weakness in the subprime sector.

Operating expenses were US$6.75 billion, essentially unchanged from the second quarter of 2006 and 14% lower than the first quarter of 2007. Of that total, compensation and benefits expenses were US$4.89 billion, 4% lower than the second quarter of 2006, primarily reflecting the impact of a lower ratio of compensation and benefits to net revenues. The ratio of compensation and benefits to net revenues was 48.0% for the first half of 2007 compared with 50.4% for the first half of 2006. Non-compensation expenses were US$1.86 billion, 16% higher than the second quarter of 2006 and 6% higher than the first quarter of 2007. The increase compared with the second quarter of 2006 was primarily attributable to the impact of higher levels of business activity and continued geographic expansion. The majority of this increase was in brokerage, clearing, exchange and distribution fees, which principally reflected higher transaction volumes in Equities.

“The outlook for the global economy remains strong. Favorable market conditions and investor confidence continue to drive activity levels and play to our strengths as a leading advisor, financier and investor,” said Lloyd Blankfein, chairman and chief executive officer. “We are pleased with the results for the second quarter.”