TOPICS > Economy

Goldman Sachs Reports Quarterly Profits of $3.4B

BY Admin  July 14, 2009 at 10:00 AM EDT

Workers in Goldman Sachs booth; AFP/Getty

Goldman’s turnaround, less than a year after the bank barely
weathered the financial crisis that put several of its competitors out of
business, is due largely to the strength of its fixed income, currency and
commodities division, which trades mortgage securities and other credit
instruments. That division posted record revenues of $6.8 billion.

The bank’s overall second-quarter profits rang in at $3.44
billion, or $4.93 a share, up from $4.58 a year ago and $3.93 for the previous
quarter.

“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.

The bank’s rebound is likely to assuage concerns that Wall
Street remains hobbled by the credit crunch. The better-than-expected earnings
report may set the tone for other big banks’ earnings reports due in the days
to come, including JP Morgan Chase, Bank of America and Wells Fargo.

But questions are also being raised about how Goldman was
able to so quickly return to profits even as it enjoyed a multi-billion dollar
cushion from the U.S. government. On Monday, the Financial Times reported that
Goldman executives sold nearly $700 million of stock during an eight-month
period following the collapse of rival Lehman Brothers last September. Most of
the sales, the newspaper reported, occurred during the period the bank had a
$10 billion federal lifeline.