Chief Financial Officer at The Goldman Sachs Group
Thank you, David. Good morning. Let's start with our results on Page 2 of the presentation. In the second quarter, we generated net revenues of $11.9 billion and net earnings of $2.9 billion, resulting in earnings per share of $7.73. We reposted a return on common equity of 10.6% and return on tangible equity of 11.4%.
Turning to performance by segment, starting on Page 3, Investment Banking generated revenues of $2.1 billion, down 41% versus a year ago. Financial Advisory revenues were $1.2 billion. Our global M&A franchise remained strong as we closed over 115 deals for approximately $380 billion of deal volume in the quarter, further strengthening our number one league table position. Equity underwriting net revenues were $131 million. Industry volumes remain muted given the ongoing market volatility. Despite this, we remain ready to deliver for our clients once the market backdrop for equity issuance improves.
Debt underwriting net revenues were $457 million, where we saw lower levels of market activity amid sharp rate increases in the quarter. While our Investment Banking backlog is down from the peak levels last year, it is still higher than it has been at any point in our history prior to 2021. We feel good about the quality of our backlog based on our healthy levels of strategic dialogue that span from technology and innovation to defensive repositioning of client portfolios, but we may see some softening if the challenging market environment persists.
Revenues from corporate lending were $352 million, up 121% versus a year ago driven by hedge gains associated with our relationship lending book that more than offset approximately $225 million in marks on certain commitments from our acquisition financing activities. We saw continued growth in our transaction banking business. The platform now serves nearly 400 clients and has roughly $65 billion in deposits at the end of the second quarter, generating approximately $175 million in revenues year-to-date.
Moving to Global Markets on Page 4, segment net revenues were $6.5 billion in the quarter, up 32% year-on-year. Growth in the quarter was driven by significantly higher client activity as we facilitated risk intermediation for clients amid of volatile market.
Looking at FICC on Page 5, revenues were $3.6 billion in the second quarter. In FICC intermediation, we saw a 50% increase in revenues with three of our five FICC intermediation businesses posting higher net revenues versus the prior year, reflecting the strength and breadth of our diversified franchise. Our macro franchise remained incredibly active as we help clients navigate rising rates, tightening monetary policies and continued volatility across commodities. This drove strong growth in net revenues, in rates, commodities and currencies. And while revenues were lower year-on-year in credit and mortgages, clients remain engaged. Meanwhile, in FICC financing, we saw considerable strength in mortgage lending and repo activity, which helped delivered record results.
Moving to equities, net revenues in the second quarter were a solid $2.9 billion. Equities intermediation revenues fell 2% year-over-year due to a more challenging market-making environment. Activity was also impacted by lower levels of primary issuance volumes. Equities financing revenues of $1.1 billion rose 38% versus a year ago and 14% versus the first quarter. Increased volatility across global equity markets drove higher demand for various forms of financing from our clients. Growth in equities financing, coupled with record performance in FICC financing, is a reflection of our strategy to grow client financing activities, which represented nearly 30% of our overall Global Markets revenues this quarter.
Moving to Asset Management on Page 6. Asset Management net revenues of $1.1 billion were materially lower than the second quarter of last year. Growth in management and incentive fees was more than offset by net losses from our on-balance sheet investment portfolio. Management and other fees totaled $1 billion, up 39% year-over-year. This increase was driven by the roll-off of fee waivers on money market funds and the addition of $305 billion of incremental AUS from the recently completed acquisition of NNIP, which contributed roughly $170 million of management and other fees this quarter.
Equity investments generated losses of $221 million, driven by sharp market declines during the quarter. More specifically, on our public equity portfolio, we experienced roughly $660 million of net losses, reducing the value of the portfolio to approximately $2.8 billion at quarter end. In our private portfolio, we produced approximately $440 million of net revenues. We generated event-driven gains of over $380 million from various positions across the portfolio. Additionally, we had operating revenues of approximately $165 million related to our consolidated investment entities. These revenues were partially offset by approximately $100 million of marks, particularly in the technology and consumer sectors.
We remain focused on our strategy of migrating our alternatives business to more third-party funds. And in the second quarter, we raised over $20 billion of commitments. We also harvested over $1 billion of on-balance sheet equity investments. The pace of our realizations this quarter was influenced by both macro and micro drivers with persistent volatility in equity markets, making it more difficult to harvest assets. Net revenues from lending and debt investment activities in asset management were $137 million, down 78% versus a year ago as net interest income of $275 million was partly offset by mark-to-market losses of approximately $140 million due to spread widening.
I will turn to Consumer & Wealth Management on Page 9. We produced record net revenues of $2.2 billion in the second quarter, up 25% versus a year ago, driven by higher net revenues in both wealth management and consumer banking. For the quarter, wealth management and other fees of $1.2 billion rose 10% versus last year, driven by higher placement fees and higher average assets under supervision. While private banking and lending net revenues of $320 million were down relative to record results last quarter, revenues were up 23% year-on-year due to higher lending and deposit balances. Consumer banking revenues were $608 million in the second quarter, rising 67% versus last year and 26% versus the first quarter.
Now moving to Page 10, total firm-wide AUS ended the quarter at $2.5 trillion. Combined firm-wide management and other fees in the second quarter rose 22% year-over-year to $2.2 billion. We expect our fee revenues to continue to grow as we progress towards our fundraising and management fee targets we laid out earlier this year.
On Page 11, total firm-wide net interest income of $1.7 billion in the second quarter was down [Phonetic] modestly relative to the first quarter due to lower net interest income in Global Markets. Our total loan portfolio at quarter end was $176 billion, up $10 billion versus the first quarter primarily due to growth in corporate, wealth management and residential real estate loans. Our provision for credit losses in the second quarter was $667 million, up from $561 million in the first quarter.
Provisions in the quarter were primarily due to growth in our consumer lending portfolio and higher modeled losses due to economic indicators worsening quarter-over-quarter. Overall, our portfolio fundamentals remain strong as reflected by minimal impairments across our wholesale lending book. On the consumer side, while we do not see signs of meaningful credit deterioration, we are closely monitoring the portfolio and are taking mitigating actions as appropriate.
Now, let's turn to expenses on Page 12. Our total quarterly operating expenses were $7.7 billion, down 11% year-over-year. Our compensation ratio for the quarter net of provisions was 33%. Quarterly non-compensation expenses were $4 billion. Year-over-year increases were driven by integration and run-rate expenses related to the NNIP and GreenSky acquisitions as well as continued investments, particularly in technology, and higher levels of business activity. Together, NNIP and GreenSky contributed approximately $200 million to non-compensation expenses this quarter.
Given the challenging operating environment, we are closely reexamining all of our forward spending and investment plans to ensure the best use of our resources. As a result, we are taking a number of actions to improve our operating efficiency. Specifically, we have made the decision to slow hiring velocity and reduce certain professional fees going forward, though these actions will take some time to be reflected in our results. We are keeping in mind, however, that while we are being disciplined about our expenses, we are not doing so to the detriment of our client franchise or our growth strategy.
Turning to capital on Slide 13, our common equity Tier 1 ratio was 14.2% at the end of the second quarter under the standardized approach, down 20 basis points sequentially and representing an 80 basis point buffer to our current capital requirement as we enter the second half of the year. This past quarter, we returned $1.2 billion to shareholders, including common stock repurchases of $500 million and common stock dividends of over $700 million.
As David noted earlier, in the third quarter, our Board of Directors increased our quarterly dividend by 25% to $2.50 per share. Looking ahead, we will remain nimble in response to both ongoing opportunities to support clients and the current operating environment. While we will continue to deploy capital in our business where returns are accretive, we are actively evaluating share repurchases in light of our current stock price.
In conclusion, our solid second quarter results reflect our ability to navigate volatile markets, while actively supporting our clients. We remain confident in our financial position, capital base and liquidity, which will help us serve clients as they navigate these challenging markets. And we are committed to executing on our growth strategy and delivering for our shareholders.
With that, we will now open up the line for questions.