Wall Street banks enjoy record windfalls from prime brokerage business

Wall Street powerhouse Goldman Sachs GS.N witnessed a record quarter for its prime business. Equity financing revenue skyrocketed 91% from a year earlier, driven by strong growth in Asia, resulting in record average prime balances for the bank. Across its fixed income, currencies, and commodities (FICC) & equities businesses, financing revenues jumped 62% to $4.5 billion, accounting for about 37% of total FICC and equity revenues for the bank.

"Client activity was particularly strong in Asia, driven in part by robust AI capital formation and investment. This strength also extended into financing where we generated another quarter of record revenues as we deployed our balance sheet to support clients with average prime balances rising to another record," said Goldman CEO David Solomon.

Goldman CFO Denis Coleman said the bank identified Asia as a strategic growth area for its prime business.

"We made the decision to start ramping that up in the first quarter, which gave rise to questions as to (whether) we could sustain that investment," Coleman told analysts on Tuesday. "We have revenues that are resulting from those investments that we made, and we're entering the second half with a capital cushion that's even larger."