Goldman Sachs profit soars 45% on trading and dealmaking
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The news: Goldman Sachs posted a 45% jump in third-quarter profit to USD3 billion ($4.46 billion) compared to a year earlier, beating market expectations, boosted by strong equity trading and investment banking performance.
The numbers: The stock trading unit had its best quarter in over three years, with investment banking fees also surging by 20%, led by mergers and debt offerings. Revenue from fixed-income trading, however, dropped 12%.
Two years after stepping back from its consumer business, Goldman’s profits are still taking a hit, booking a USD415 million ($618 million) loss from exiting its credit card partnership with General Motors, which Barclays took over.
Wealth and asset management revenues jumped 16%, with assets under management hitting a record USD3.1 trillion.
Net income reached USD2.99 billion in the quarter or USD8.40 per share, compared to USD2.06 billion or USD5.47 per share in the same period a year earlier. The firm’s return on equity was 10.4%, below its mid-teens target.
The context: Goldman’s performance reflects a broader rebound in investment banking, as other major players like JPMorgan Chase and Citigroup also posted strong results in dealmaking amid a resurgence in M&A, debt and equity offerings.
While deal volumes are still below the 2021 boom, improving CEO confidence in expectation of lower interest rates is encouraging companies and private equity firms to pursue deals that were previously too costly.
Goldman is also positioning itself for growth in asset and wealth management to build a steadier revenue stream.
What they said: “Goldman Sachs must have finished strong in the third quarter, with revenue up 7% as they beat the street on just about every line,” Evercore ISI analyst Glenn Schorr wrote in a note.
“With rates set to come down further and the capital markets backdrop looking good, our gut is investors will continue to ride Goldman as one of the pure plays for the improving backdrop.”
The sources: Goldman Sachs releases , Bloomberg
