Goldman Sachs is expected to report strong trading results — which may, in turn, herald the return of bumper pay packets across the banking industry — when it begins American banks’ second-quarter reporting season tomorrow.

Consensus estimates put Goldman Sachs’s revenue for the three months to June 30 at $10.7 billion (£6.6 billion) and net income at $1.7 billion, against $9.4 billion and $2 billion in the three months to May 30 last year, the reporting period having been changed.

Banks reported record trading revenues in the first quarter, particularly in fixed income, as the few players with capital to put to work reaped rewards in areas such as corporate bonds, treasuries and agency mortgage debt.

Guy Moszkowski, an analyst for Bank of America-Merrill Lynch, said that he expected Goldman Sachs to reveal that it was on track to make $26.4 billion from trading this year, up on its record-breaking $25.3 billion trading haul in 2007. He estimated that the bank would put aside 44.2 per cent of this year’s revenue for remuneration and benefits, putting its pay pool at $17.9 billion, up from $10.9 billion last year.

Having repaid a $10 billion taxpayer bailout, Goldman is free of government constraints on pay, although, like other banks, it is expected to increase the proportion of stock in its pay packages.

Roger Freeman, a Barclays Capital analyst, said that Goldman’s view on the second half was crucial: “Several companies have already telegraphed that the trading environment in the second quarter has been strong, with plain-vanilla credit-trading businesses performing very well. The question is: ‘How sustainable is this and for how long?’ ”

JPMorgan Chase, Citigroup and Bank of America (BoA), reporting later in the week, are expected to produce mixed results, with profits for JPMorgan and BoA but a loss of more than $1 billion for Citigroup.

Investors said that markets were unlikely to be boosted by mostly strong bank profits. Russ Koesterich, of Barclays Global Investors, said: “Capital adequacy is still an issue.”

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