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

Goldman Sachs posted third-quarter results on Friday 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% in premarket trading.

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

But Goldman exceeded expectations, producing $3.7 billion in investment banking revenue, 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.

Its wealth and asset management businesses should benefit from high equity values. And the firm’s consumer banking businesses have continued to grow. All that feeds into Solomon’s efforts to improve the steadiness of results at the company.

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 have climbed 47% this year, exceeding the 37% rise of the KBW Bank Index

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

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