Goldman Sachs beats on profit and revenue as stock trading and investment banking boost results

Wall Street trading and investment banking has helped the big banks this quarter, and Goldman Sachs results showed why they are a leader in those areas. Read more...

David Solomon, Chairman & CEO Goldman Sachs, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 17th, 2024.

Adam Galici | CNBC

Goldman Sachs topped estimates for third quarter profit and revenue on strong results from its stock trading and investment banking operations.

Here’s what the company reported:

Earnings: $8.40 per share vs. $6.89 LSEG estimate
Revenue: $12.70 billion vs. $11.8 billion estimate

The bank said profit surged 45% from a year earlier to $2.99 billion, or $8.40 per share, as revenue climbed 7% to $12.7 billion.

Equities trading was the outlier this quarter at Goldman, posting an 18% increase in revenue to $3.5 billion, more than half a billion dollars higher than the $2.96 billion estimate. The company cited strong results in both derivatives and cash trading.

Fixed income trading revenue slipped 12% from a year earlier to $2.96 billion, just above the $2.91 billion estimate, on a slowdown in interest rate products and commodities.

Investment banking revenue jumped 20% to $1.87 billion, topping the $1.62 billion estimate, on strength in debt and equity underwriting, and the bank said its backlog for pending deals increased from both a year earlier and the second quarter.

The firm’s asset and wealth management division also helped it top expectations; revenue there jumped 16% to $3.75 billion, exceeding the $3.58 billion estimate on rising management fees and gains in investments.

How much will falling interest rates help Goldman Sachs?

Over the past two years, the Federal Reserve’s tightening campaign has made for a less-than-ideal environment for investment banks like Goldman.

Now that the Fed is easing rates, that positions Goldman to benefit as corporations that have waited on the sidelines to acquire competitors or raise funds begin to take action.

Goldman’s asset and wealth management division is also positioned to benefit from rising asset values across markets as rates decline.

Last week, rival JPMorgan Chase set expectations high with better-than-anticipated results from trading and investment banking, factors that helped the bank top earnings estimates.

Wells Fargo also exceeded estimates on Friday on the back of its investment banking division.

This story is developing. Please check back for updates.