Goldman Sachs Group Inc. reported a lower third-quarter profit but managed to beat reduced earnings expectations on record revenue in its equities and financing units on Tuesday.
Goldman Sachs Group’s
GS,
profit for the three months ended Sept. 30 dropped by about 36% to $1.88 billion, or $5.47 a share, from $2.96 billion, or $8.25 a share, in the year-ago quarter. The latest figure includes $2.41 a share in one-time items.
Analysts tracked by FactSet expected Goldman Sachs to report earnings of $5.42 a share.
Third-quarter revenue fell to $11.82 billion from $11.98 billion in the year-ago quarter, ahead of the estimate of $11.15 billion.
Goldman Sachs stock rose fractionally in pre-market trading.
Global banking and markets generated net revenues rose 6% to $8 billion, driven by its performance in fixed income, currency and commodities and equities. The bank also said it booked record quarterly revenue in financing.
Net revenue for equities rose 8% to $2.96 billion, as it booked higher equities financing revenue, which reflected “significantly higher net revenue in prime financing,” the bank said. This was offset by lower portfolio financing revenue, while revenue increased in equities intermediation, primarily in derivatives.
Investment banking fees were unchanged at $1.55 billion, as the bank benefitted from debt underwriting, which was driven by leveraged finance activity, while a decline in mergers and acquisitions weighed on its advisory business.
Chief Executive David Solomon said the bank continues to make progress on its efforts to realign its business such as the recent sale of its GreenSky consumer lending unit.
“I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive,” Solomon said.
Goldman Sachs was expected to earn $7.78 a share at the start of the quarter, according to FactSet consensus estimates.
Goldman Sachs stock holds the distinction of being the only big U.S. bank with a positive performance in the third quarter, with a slim 0.3% gain.
However, the stock has fallen 8.5% in the past month, compared to a 1.9% drop by the Dow Jones Industrial Average
DJIA.
Goldman Sachs Chief Executive Solomon has been under scrutiny after disclosing losses in the consumer banking unit and drawing criticism from within the company’s ranks.
Analyst have been tempering their expectations for Goldman Sachs amid a lackluster deal environment for M&A and initial public offerings.
Along with Goldman Sachs, Bank of America Corp.
BAC,
reported third-quarter earnings on Tuesday, with Morgan Stanley
MS,
on Wednesday. JPMorgan Chase & Co.
JPM,
Citigroup Inc.
C,
and Wells Fargo & Co.
WFC,
reported earnings on Friday.
Also read: Goldman Sachs sheds GreenSky lending platform but still faces lack of low-cost deposits, analyst says
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