Goldman Sachs (NYSE: GS), the Wall Street investment bank, beat third-quarter profit and revenue forecasts by a wide margin today, and its shares were indicated about 3.5% higher before the US open. Earnings per share, as reported, were $17.01 against an average analyst estimate of $13.09.
Premarket, the shares were indicated at $925.00 by 12:58pm UK time, up $31.05 or 3.47% on yesterday’s close of $893.95. That is a pre-market indication, not a regular-session price.
Net revenue, as reported, was $18.68bn, against consensus of about $16.9bn and $15.18bn a year earlier, an increase of 23%. Net earnings rose 29% to $5.29bn. Last year’s third-quarter EPS was $12.25.
Chairman and CEO David Solomon pointed to client demand in what he called a complicated environment:
“Against the backdrop of a complicated operating environment, our clients continued to turn to Goldman Sachs for our world-class advice, execution, and financing capabilities, resulting in our second-highest quarterly net revenues and record year-to-date net revenues.”
David Solomon, Goldman Sachs
Equities did much of the work. Equities revenue was $6.44bn, up 72% on the year though down 13% from the second quarter, with equities financing up 96% on the year. Combined with fixed income, trading revenue was about $9.9bn against about $8.8bn expected, below the record $12bn of the second quarter.
The shares had slid about 22% from mid-July into the results.
The quarter was lopsided. Fixed income, currencies and commodities (FICC) trading revenue was $3.47bn, down 24% on the quarter and 1% on the year. Investment banking fees rose 21% on the year to $3.22bn, with advisory revenue a record $1.65bn, and wealth management revenue rose 14% to $5.06bn.
Elsewhere there were drags. Provisions for credit losses were $368m, up from $102m in the second quarter, and Platform Solutions revenue fell 72% to $170m, including Apple Card markdowns. Charitable contributions cut EPS by about $1.
The beat was not sector-wide. JPMorgan’s EPS was $5.57 against about $5.90 expected, with fixed-income markets revenue down 4% to $5.4bn, although its shares were about 1.9% higher premarket. Wells Fargo’s EPS of $1.87 topped $1.84 expected, but revenue of $21.87bn missed $22.33bn, and its shares fell early.
Morgan Stanley, Bank of America and BlackRock report tomorrow, the same day as September CPI. The KBW Bank Index is about 13% below its August peak.
