Goldman's equity underwriting unit saw revenue drop 5% to $371 million in the second quarter, missing consensus estimates. Quarterly merger advisory fees of $486 million also indicated lackluster growth. Goldman's overall investment banking revenue was stabilized by record debt underwriting revenue of $695 million.

The bank's GSAM investment management unit, meanwhile, posted flat revenue from year-ago levels, at $1.33 billion. Competitors such as Wells Fargo ( WFC) and Morgan Stanley ( MS) are gaining market share in investment management just as many expect investors to return to equity markets.

Goldman did report a 9% quarterly rise in equity trading revenue to $1.85 billion, and continues to earn the most revenue on Wall Street from the business.

Goldman's earnings beat was mostly attributable to $1.42 billion in revenue posted by its Investing & Lending unit, driven by rising marks to the bank's private equity investments and its portfolio of equity and debt market securities.

As regulators work to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act, Goldman will not be able to continue relying on its private equity and securities investments to such a great degree. Consensus among Wall Street analysts was for Goldman to see such earnings come in below $900 million, according to data compiled by Bloomberg.

The bank was also able to post a new record in debt underwriting revenue, even amid an end-of-quarter surge in interest rates that drove the worst quarterly bond market performance since 1994.

Factors such as asset sales and a falling tax rate also played into earnings.

"The beat was primarily driven by investment gains in the Investing & Lending division, a lower than expected tax rate and a slight beat on investent banking fees," Richard Staite, an Atlantic Equities banking analyst, wrote in a note reacting to earnings.

Goldman Sachs shares fell over 1.5% in Tuesday trading, closing at $160.24.

-- Written by Antoine Gara in New York

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