Goldman Sachs posts strong Q2 profits on debt underwriting and fixed-income trading surge

"We are pleased with our solid second quarter results and our overall performance in the first half of the year, reflecting strong year-on-year growth in both Global Banking & and & Wealth Management," CEO David Solomon said in a statement.

The bank's earnings in the year-ago quarter were hit by writedowns related to GreenSky, its former fintech business that Goldman has since sold.

The resilience of the U.S. economy has given corporate executives the confidence to pursue acquisitions, debt sales and stock offerings.

Goldman's fees rose 21% to $1.73 billion in the quarter, helped by higher fees earned from debt and stock underwriting and advising on mergers and acquisitions (M&As).

from fixed income, currency and commodities (FICC) trading rose 17%, boosted by FICC financing, which makes loans to institutional investors and others. Equities trading revenue increased 7%.

JPMorgan Chase and Jefferies Financial also recorded a strong performance in their investment banking divisions. Global investment banking revenue climbed 17% to $41.6 billion in the first half of the year, Dealogic data showed.

After a foray into consumer banking flopped, Goldman has refocused on its traditional mainstays - investment banking and trading.

Investors have supported the move, pushing the Wall Street titan's stock up 24.4% so far this year, compared with rivals Morgan Stanley's 11.6% gain and JPMorgan Chase's 20.5% climb.

Goldman' asset and wealth management unit, which manages money on behalf of wealthy and institutional clients, reported 27% higher revenue in the second quarter.

The bank oversees $2.93 trillion of assets. In May, it signed a deal to manage the $43.4 billion pension fund portfolio of parcel delivery giant UPS.

Platform solutions, the unit that houses some of Goldman's consumer operations, reported 2% higher revenue.

The bank's provisions for losses were $282 million for the second quarter, compared with $615 million a year earlier.

CREDIT CARDS

Goldman plans to scrap its co-branded credit cards with General Motors, and a similar partnership it has with tech giant Apple is facing an uncertain future.

General Motors is in talks to replace Goldman with Barclays , a source familiar with the matter told Reuters in April.

Credit cards were an important facet of Goldman's consumer strategy, but it decided to retreat from retail banking after big losses.

In its annual stress test, the Federal Reserve indicated credit cards could be a headache for banks. The potential losses on Goldman's credit card loans were among the worst under the central bank's hypothetical scenario.

Still, Goldman raised its dividend to $3 per share versus $2.75 earlier.