Goldman Reports Big Profit, Beating Forecasts

By GRAHAM BOWLEY

Comfortably beating analysts' forecasts, Goldman Sachs earned second-quarter profits of $3.44 billion, or $4.93 a share, the bank announced on Tuesday.

The results continue a robust turnaround for the firm since it rode out the final tumultuous months of 2008 with the help of a federal rescue. They come just one month after it paid back its $10 billion in federal aid.

Goldman's profit was lifted by record quarterly revenues of $6.8 billion in its fixed income, currency and commodities unit, where mortgage and other credit instruments are traded, the bank said in a statement. Its equities business also generated record net revenues, it said.

"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," Lloyd C. Blankfein, Goldman's chief executive, said in a release. Goldman was humbled along with the rest of Wall Street last year when the financial markets froze.

As a result, it lost money in the final quarter of 2008, a rarity for the bank.

But since then it has rebounded strongly, posting robust profits in the first quarter on the back of trading revenues and again in the latest quarter.

Many analysts are likely to welcome the news as another sign that the financial industry is stabilizing, and the Goldman results will probably set a positive tone for a slew of other bank results expected in the coming week.

But they are also raising questions about how Goldman's rapid return to making strong profits will be perceived by lawmakers and taxpayers who helped Goldman with the multibillion-dollar cushion last fall after the nation's financial industry was shaken to its foundations.

Goldman's trading revenues have been helped by the fact that several of its rivals have gone out of business following the credit crisis, a fact that has added to its market share. It has also been able to increase it fees.

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