Goldman Sachs wallops profit estimates on stronger-than-expected bond trading

Goldman Sachs posted third-quarter results that crushed analysts’ profit estimates on stronger-than-expected results in bond trading and asset management.

The firm generated $3.62 billion in profit, or a record $9.68 a share, exceeding the $5.57 per share estimate of analysts surveyed by Refinitiv. Companywide revenue climbed 30% to $10.78 billion, topping the estimate by more than $1 billion, driven by the trading and asset management divisions.

Shares of the bank climbed 3.1% in premarket trading.

“Our ability to serve clients who are navigating a very uncertain environment drove strong performance across the franchise, building off a strong first half of the year,”  Chief Executive Officer David Solomon said in the release.

The bank’s trading division generated $4.55 billion in revenue, a 29% increase from the year earlier period. That gain was fueled by bond trading results of $2.5 billion, nearly half a billion dollars more than analysts surveyed by FactSet expected. Equities trading revenue of $2.05 billion essentially matched expectations.

The firm’s asset management division produced $2.77 billion in revenue, a 71% gain from the year earlier and nearly $900 million more than the $1.91 billion FactSet estimate.

Goldman said the result was drive by “significantly higher” revenues from equity investments and lending and debt investments. The bank holds a portfolio of public and private company stock in this division, and higher market levels in public shares drove the beat there, the firm said.

Solomon just marked his second year atop Goldman Sachs, but he’s still putting his imprint on the firm. Last month, he restructured several of his businesses and named new heads for the New York-based bank’s asset management and consumer and wealth management divisions.

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The 151-year-old investment bank is in the midst of a transformation, launching a slew of digital banking products in hopes of disrupting its established retail banking competitors.

It’s also pushing to get more revenue from wealth management, like rival Morgan Stanley, but hasn’t announced megadeals like the two major acquisitions Morgan Stanley disclosed this year.

Goldman shares have fallen 8.3% this year, a smaller decline than most big banks and the 31% drop of the KBW Bank Index.

On Tuesday, rivals JPMorgan Chase and Citigroup posted results that beat analysts’ expectations as both banks set aside less money for defaulting loans.

Here’s how the company did:

Earnings: $9.68 per share, vs. $5.57 expected by Refinitiv’s consensus estimate.

Revenue: $10.78 billion, vs. $9.46 billion estimate.

Trading Revenue: Fixed Income of $2.5 billion vs $2.03 billion FactSet estimate, Equities of $2.05 billion vs $2.02 billion estimate.

This story is developing. Please check back for updates.



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