“We expect quarterly revenues for the remainder of the year to be broadly consistent with the second quarter.”

In context

“Denis Coleman: Thank you, David. Good morning, everyone. Let's start with our results on page one of the presentation. In the second quarter, we generated our highest net revenues of $20.3 billion, as well as our highest earnings per share of $20.98, which drove a quarterly ROE of 23.5% and ROTE of 25.5%. Turning to segment performance, starting on page three. Global Banking & Markets revenues were a record $15.5 billion in the second quarter, contributing to a segment ROE of 25% for the first half of the year. Moving to page four, advisory revenues of $1.4 billion rose 17% year-over-year, primarily driven by higher completed volumes. For the year to date, we extended our number one league table position for announced and completed M&A volume. Through the first half of the year, we advised on $1.2 trillion in announced deal volumes with a lead of approximately $425 billion ahead of our closest peer. In equity underwriting, revenues were $985 million, up 130% year-over-year, supported by robust deal volumes across a broad range of transactions, including the marquee mandates for Alphabet and SpaceX, helping to drive our number one league table position through the first half of the year. In debt underwriting, revenues were $1 billion, up 75% year-over-year, representing our best quarter on record, driven by stronger performance in leveraged finance and asset-backed activity. Year to date, we ranked first in leveraged lending and second in high-yield debt underwriting. As David noted, our investment banking backlog increased to its highest level in five years, even with the very strong revenue production this quarter. We remain optimistic on the investment banking outlook as strategic dialogue remains robust. While sponsor volumes are still subdued versus historical averages, this represents a meaningful source of potential upside as activity picks up. FICC net revenues were $4.6 billion, up 32% from the prior year. Intermediation revenues were up 39% on stronger performance across interest rate products, commodities, and mortgages. Financing revenues increased 14% to a new record and included strong performance in mortgages and structured lending. Equities net revenues were a record $7.4 billion for the second quarter. Record equities intermediation revenues of $4.2 billion increased 60% year-over-year, reflecting stronger activity across derivatives and cash products. Equity financing was also a record, up 91% year-over-year, driven by continued strength in Asia and another record for average prime balances. Across FICC and equities, financing revenues of $4.5 billion rose 62% versus the prior year and comprised 37% of total FICC and equities revenues. Let's turn to page five. Asset and Wealth Management revenues were up 20% year-over-year to $4.6 billion. Year-to-date pre-tax margin was 24%, and the ROE was 13.5%. Management and other fees were up 20% year-over-year to a record $3.4 billion, primarily on higher average assets under supervision. Incentive fees were $112 million. We expect these fees to increase materially for the remainder of the year. Private banking and lending revenues were $689 million, and we continue to see strong loan growth with balances rising to $48 billion. Investments revenues of $441 million were up significantly year-over-year from substantially higher net gains on investments in private equity. Now moving to page six. Total assets under supervision ended the quarter at a record $4 trillion, supported by $91 billion of long-term net inflows across asset classes, particularly in equity assets. This marks our 34th consecutive quarter of long-term fee-based net inflows. Turning to page seven on alternatives. Alternative AUM totaled $459 billion at the end of the second quarter, driving $725 million in management and other fees. Gross third-party alternatives fundraising was a record $59 billion for the quarter and $85 billion for the first half of the year. Given the strength we've seen year to date, we now expect full-year fundraising to exceed $125 billion. On page eight, Platform Solutions revenues were $221 million in the quarter. We expect quarterly revenues for the remainder of the year to be broadly consistent with the second quarter. On page nine, firm-wide net interest income was $4 billion in the second quarter. Our total loan portfolio increased 3% sequentially to $261 billion, primarily reflecting growth in other collateralized and residential real estate loans. Our provision for credit losses of $102 million primarily reflected impairments related to wholesale loans. Turn to expenses on page 10. Total operating expenses were $11.7 billion for the quarter and $22.1 billion for the year to date. Through the first half of the year, we generated material operating leverage with an efficiency ratio of 58.8%, improving 320 basis points from the prior year period, helped by a decline in our compensation ratio net of provisions to 31%. Quarterly non-compensation expenses increased from the prior year to $5.6 billion, with the increase driven by transaction-based expenses tied to robust activity levels, particularly in equities. Even in a stronger revenue backdrop, we remain focused on disciplined expense management and driving efficiencies over time. Our effective tax rate for the year to date was 18.5%. For the full year, we continue to expect an effective tax rate of approximately 20%. Now on to slide 11. Common equity tier-one ratio was 12.9% at the end of the second quarter under the standardized approach, 150 basis points above our current capital requirement of 11.4%. We were pleased with our results in the recent CCAR test, which demonstrated the strength of our balance sheet under a severely adverse economic scenario. Our stress capital buffer of 3.4% remains unchanged and is effective through September 2027. We are encouraged by the direction of the proposed changes to the regulatory framework, including continued efforts to enhance transparency and improve stress test calibration. We look forward to swift progress towards Basel III finalization. A more balanced and risk-sensitive regulatory approach will be supportive of bank lending and capital formation and ultimately constructive for the broader economy. Our capital management priorities remain unchanged, which are to invest in our business at attractive returns, sustainably grow our dividend, and return excess capital to shareholders through buybacks. Our capital actions this quarter reflect our continued disciplined approach across each of these priorities to support clients and also enhance shareholder value. We recently announced an increase to our quarterly common stock dividend to $5 per share. We repurchased $4 billion of our common stock this past quarter. In conclusion, our record results reflect the strength, scale, and diversification of our world-class interconnected client franchises. As we look ahead, the opportunity set remains compelling across the firm, supported by sustained client engagement and a backdrop of elevated capital formation and deal-making activity. Importantly, the progress we have made on our strategic priorities has strengthened our platform, enhanced our risk management capabilities, and improved our ability to capture this opportunity. With a strong operating environment driving a robust flywheel of activity across our franchise, we're confident in our ability to continue to deliver for clients and generate more durable returns for shareholders. With that, we'll open it up for questions.”