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

Key Points

• Goldman Sachs topped estimates for third-quarter profit and revenue on strong results from its stock trading and investment banking operations.
• Equities trading posted an 18% revenue increase to $3.5 billion, more than half a billion dollars higher than the $2.96 billion estimate from StreetAccount.
• Investment banking revenue jumped 20% to $1.87 billion, on strength in debt and equity underwriting,

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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.

Goldman shares were roughly flat after rising 2% earlier in the session.

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 its benchmark rate, Goldman is positioned to benefit as corporations that have waited on the sidelines to acquire competitors or raise funds begin to take action, and rising values bolsters its asset and wealth management business.

CEO David Solomon cited an "improving operating environment" as he touted his firm's results on Tuesday.

Equities trading was the outlier this quarter, posting an 18% revenue increase to $3.5 billion, more than half a billion dollars higher than the $2.96 billion estimate from StreetAccount. 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 StreetAccount 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 from StreetAccount on rising management fees and gains in investments.

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.