Goldman Sachs posted third-quarter revenue and income Tuesday that exceeded analysts’ estimates on stronger-than-expected buying and selling income.
Here is what the corporate reported:
- Earnings: $5.47 a share, topping the $5.31 a share estimate from LSEG, previously referred to as Refinitiv
- Income: $11.82 billion vs. $11.19 billion anticipated
The financial institution mentioned revenue dropped 33% to $2.058 billion, or $5.47 a share, from a 12 months earlier. Income additionally slipped 1% to $11.82 billion, although that topped expectations by roughly $600 million.
Bond buying and selling income fell 6% from a 12 months earlier to $3.38 billion, however that was virtually $600 million greater than what analysts had anticipated. Goldman cited power in rate of interest merchandise and mortgages, which helped offset declines in buying and selling of currencies, commodities and credit score.
The agency’s efforts to spice up lending actions within the buying and selling division additionally helped as fastened earnings financing income reached a report $730 million.
Equities buying and selling income climbed 8% from a 12 months earlier to $2.96 billion on larger exercise in derivatives, topping the estimate by roughly $200 million.
David Solomon, chief government officer of Goldman Sachs Group Inc., on the Goldman Sachs Monetary Providers Convention in New York, Dec. 6, 2022.
Michael Nagle | Bloomberg | Getty Photos
Funding banking income edged larger by 1% to $1.55 billion, barely exceeding the $1.48 billion estimate.
Goldman shares dipped about 1% in morning buying and selling.
Amongst its massive financial institution friends, Goldman Sachs is essentially the most reliant on funding banking and buying and selling income.
Whereas it is made efforts underneath CEO David Solomon to diversify its income stream, first in an ill-fated retail banking push and later because it emphasised progress in asset and wealth administration, it’s Wall Road that powers the corporate. Final quarter, buying and selling and advisory accounted for two-thirds of Goldman’s income.
That is been a headwind this 12 months as mergers, preliminary public choices and debt issuance all have been muted because the Federal Reserve boosted rates of interest to gradual the financial system down. With indicators that exercise has picked up currently, analysts can be keen to listen to about Goldman’s pipeline of offers.
On the similar time, Goldman has taken hits from two areas: Its strategic retrenchment away from retail banking has saddled the agency with losses because it finds consumers for undesirable operations, and its publicity to industrial actual property has resulted in write-downs as nicely.
The financial institution mentioned Tuesday it posted a $506 million third-quarter write-down tied to lending enterprise GreenSky, and $358 million in actual property impairments.
“We proceed to make important progress executing on our strategic priorities,” Solomon mentioned within the launch. “I additionally count on a continued restoration in each capital markets and strategic exercise if situations stay conducive. Because the chief in M&A advisory and fairness underwriting, a resurgence in exercise will undoubtedly be a tailwind for Goldman Sachs.”
Analysts can be eager to listen to extra on Solomon’s view of the funding banking outlook, in addition to how the remaining components of its client effort — primarily, its Apple Card enterprise — match within the newest iteration of Goldman Sachs.
Goldman shares have dropped 8.4% this 12 months via Monday, a greater exhibiting than the 21% decline of the KBW Financial institution Index.
Final week, JPMorgan, Wells Fargo and Citigroup every topped expectations for third-quarter revenue, helped by better-than-expected credit score prices. Morgan Stanley is scheduled to put up outcomes Wednesday.
This story is growing. Please examine again for updates.
