Goldman Sachs crushes analysts’ estimates on strong investment banking and trading results

Goldman Sachs posted Friday third-quarter results that exceeded analysts’ expectations, as investment banking revenue surged nearly 90%, and the bank reaped record fees from equities financing.

Here are the numbers:

• Earnings: $14.93 a share vs. $10.18 consensus estimate, according to Refinitiv
• Revenue: $13.61 billion vs. $11.68 billion consensus estimate

Profit at the bank surged 63% to $5.28 billion, or $14.93 a share, as revenue climbed 26% to $13.61 billion. Shares of the New York-based bank rose 2.4%.

Goldman — led by CEO David Solomon — has the world’s premier investment banking franchise, and analysts had expected strong revenue from booming mergers and IPO activity in the quarter. That theme played out at Wall Street rivals from JPMorgan Chase to Morgan Stanley.

But Goldman exceeded expectations, producing $3.7 billion in investment banking revenue. That’s an 88% increase from a year earlier and roughly $750 million more than the StreetAccount estimate. Those results were driven by a rise in completed merger transactions and debt and equity underwriting; the bank said advisory revenue hit a record high.

Revenue in the bank’s markets division climbed 23% to $5.61 billion, as an expected slowdown in bond trading was offset by a surge in financing results.

Bond trading revenue of $2 billion edged out the $1.97 billion StreetAccount estimate, while equities trading of $1.92 billion missed the $2.08 billion estimate. Equities financing revenue more than doubled year over year to a record $1.18 billion, and fixed income financing rose 55% to $513 million.

Meanwhile, Goldman’s consumer-facing division posted gains from high stock market values and increased credit card and deposit balances. The firm’s consumer and wealth management division saw revenue rise 35% to $2.02 billion, exceeding the $1.79 billion estimate.

“Goldman Sachs simply crushed third quarter earnings,” said Dave Donovan, an executive vice president of financial services for Publicis Sapient. “Where the other big banks released loan loss reserves to bolster third quarter numbers, Goldman’s strategy has been growing the business.”

Analysts are likely to ask Solomon about the rationale for his $2.24 billion acquisition of fintech lender GreenSky. The deal is expected to close by the first quarter of 2022.

The bank said last month that CFO Stephen Scherr would step down by year-end, to be replaced by Denis Coleman, the current co-head of the firm’s Global Financing Group.

Goldman shares were up 47% this year as of Friday, exceeding the 37% rise of the KBW Bank Index.

Goldman is the last of the six biggest U.S. banks to report earnings. JPMorgan, Bank of America, Morgan Stanley, Citigroup and Wells Fargo exceeded expectations for profit and revenue, helped by reserve releases and strong investment banking revenue.

This story is developing. Please check back for updates.