The Goldman Sachs Group, Inc. Tuesday reported strong results for its second quarter, characterized by a large jump in net revenues and earnings.

The firm generated net revenues of US$13.76 billion and net earnings of US$3.44 billion for its second quarter ended June 26. Annualized return on average common shareholders’ equity was 23.0% for the quarter, pushing the first half ROE to 18.3%.

UBS Securities LLC says that Goldman’s reported earnings per share is much stronger than analyst expectations, and it wasn’t all down to a strong performance by the fixed income division. “Revenue drivers were record FICC trading (expected), but also record equity trading and underwriting as Goldman enjoyed huge client flows, wide spreads and high volatility,” it said.

The only negatives UBS sees in the results were a mark down in the value of some real estate investments; a slump in merger and acquisition advisory revenues, down 30% sequentially and 54% year over years “as the deal backdrop remains challenging”; a 38% drop in securities services revenues “as the prime brokerage business is not what it used to be (not just a Goldman thing)”; and a 3% slip in asset management revenues.

“While markets remain fragile and we recognize the challenges the broader economy faces, our second quarter results reflected the combination of improving financial market conditions and a deep and diverse client franchise,” said Lloyd Blankfein, chairman and CEO of Goldman. “Our role as an intermediary focused on making markets for buyers and sellers helped drive our performance. We were also active as an underwriter of many significant debt and equity offerings for clients.”

IE