Goldman Sachs reported their third-quarter profit and revenue Tuesday which outperformed what analysts had predicted due to higher trading revenue. Earnings were $5.47 per share, surpassing the estimated $5.31 per share from LSEG, whereas revenue totaled $11.82 billion, approximately $600 million more than forecast. Bond trading revenue decreased 6% compared to the same period last year, yet still came in $600 million above projections. Equities trading revenue grew 8%, surpassing expectations by around $200 million. Investment banking revenue increased by 1%, narrowly exceeding the $1.48 billion estimated.
With two-thirds of their income coming from trading and advisory, Goldman has launched initiatives to diversify their revenue stream, notably a retail banking push that has not been successful. Their challenges have been compounded by reduced activity in mergers, initial public offerings, and debt issuance this year as a result of the Federal Reserve escalating interest rates. Nevertheless, recent indications of increased activity have generated curiosity around Goldman's pipeline of upcoming deals. The bank has also suffered losses in their strategic retrenchment from retail banking as well as from write-downs of their exposure to commercial real estate.
The performance of Goldman shares this year has been better than the 21% drop of the KBW Bank Index, with the stock down 8.4%. JPMorgan, Wells Fargo and Citigroup reported better-than-expected third-quarter profits last week which was aided by lower-than-anticipated credit costs. Morgan Stanley will release their results Wednesday. This story is still unfolding and more information can be expected.
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