This article, originally published at 8:01 a.m. on July 19, 2016, has been updated with commentary from analysts.
Goldman Sachs (GS - Get Report) posted higher quarterly profit than analysts estimated as its investment banking business rebounded from turbulence at the beginning of the year and debt underwriting reached a near record.
Earnings of $3.72 a share topped the $3.05 average from analysts surveyed by Bloomberg, and net income climbed 78% to $1.63 billion, the New York-based bank said in a statement. Revenue dropped 13% to $7.93 billion, surpassing projections of $7.55 billion.
Finance companies with investment businesses like Goldman generally benefited from second-quarter rallies in deal-making and initial public offerings after volatility related to slumping oil prices and slowing Chinese growth hindered performance from January through March, according to executives.
Despite an 11% drop in Goldman's investment banking revenue from a year ago, for instance, the unit generated $1.79 billion from April through June, a marked improvement from the first quarter.
"It is a difficult environment for everyone," Oppenheimer analyst Chris Kotowski said in a note to clients. "We still think that Goldman will survive and thrive once this industry's inevitable shake-out is completed."
Goldman Sachs ranks first in advisory services on announced and completed mergers in the first half of 2016, CFO Harvey Schwartz said on an earnings call Tuesday, having worked on deals including Charter Communications' (CHTR - Get Report) $78.7 billion purchase of Time Warner Cable and Visa's (V - Get Report) acquisition of former subsidiary Visa Europe for nearly $20 billion.
Like rivals JPMorgan Chase (JPM - Get Report) , Citigroup (C - Get Report) and Bank of America (BAC - Get Report) , Goldman recorded double-digit gains in its bond-trading business during the second quarter, with revenue in the unit rising 20% to $1.93 billion even as Great Britain's decision to leave the European Union rocked markets near the end of June.
JPMorgan and Bank of America each topped that growth rate, however, with respective gains of 35% and 26%. Executives said the companies' benefited from clients surprised by the voters' decision who rushed to move their money into safer assets as the British pound plummeted to a 31-year low.
The firm is facing "a lot of comparisons that are very hard" from its rivals, said TheStreet's Jim Cramer.
Goldman dropped 1.1% to $161.50 at 1:51 p.m. Tuesday in New York, compounding a previous decline of 9.4% this year that was the worst performance on the blue-chip Dow Jones Industrial Average.
The bank's stock was downgraded to "hold" from "strong buy" Tuesday by S&P Global analyst Ken Leon, who reduced his full-year earnings estimate nearly 5%, to $14.75 a share.
Stock trading revenue, which dropped 25% to $587 million in the quarter, and stock underwriting, which fell 55% to $269 million, both need to be stronger, Leon said in a note to clients.
"The first half of 2016 has certainly presented its fair share of challenges and concerns," Schwartz said on the call. "While like the rest of the world, we would welcome more robust economic growth, ultimately we have to manage the firm for both the current environment and potential future opportunities."
While global stock markets have largely reversed a 7% slide in the immediate aftermath of the U.K. decision, "clients and the marketplace continue to wrestle with the so-called Brexit vote and unrelated uncertainty," Schwartz said.
How U.S. banks will structure their future operations in Europe and the United Kingdom, and how Brexit will affect their bottom lines, remains uncertain. It's likely to turn on whether the U.K. retains the so-called passporting privileges that enable countries with a license in one EU nation to conduct business in all of them, a policy that fueled London's emergence as a global financial center.
"We've been in Europe and the U.K. for a very long period of time, and we're completely committed to our clients in the region," Schwartz said on the call. "Regardless of how these negotiations go, we're going to make sure that we're there for them."
Goldman's payroll of 6,410 in the U.K. is the third-largest of the major U.S. banks, brokerage Keefe, Bruyette & Woods said in June.