Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report posted much stronger -than-expected third quarter earnings Friday thanks in part to a surge in investment banking and capital markets revenues.
Goldman said earnings for the three months ending in September were pegged at $14.93 per share, nearly 55% higher than last year's tally and smashing the Street consensus forecast of $10.11 per share. Group revenues, Goldman said, rose 26.25% to $13.61 billion, firmly beating analysts' forecasts of an $11.67 billion total.
Investment banking revenues rose 88% from last year to $3.7 billion, Goldman said, while overall capital markets revenues were up 23% to $5.61 billion.
Spac deals, gaming takeovers and fintech expansions into 'buy now, pay later' payment firms sparked a record rally in third quarter M&A that lifted the total value of transactions past $1.5 trillion, Refinitiv data noted last month, suggesting global M&A is on pace for its best year since the global financial crisis.
“The third quarter saw strong operating performance and an acceleration of our investment in the growth of Goldman Sachs," said CEO David Solomon. "We announced two strategic acquisitions in our Asset Management and Consumer businesses which will enhance our scale and ability to drive higher, more durable returns."
"Looking forward, the opportunity set continues to be attractive across all of our businesses and our focus remains on serving our clients and executing our strategy," he added.
Goldman Sachs shares were marked 2.35% higher in late-morning trading following the earnings release to change hands at $400.40 each, a move that would extend the stock's year-to-date gain to around 50%.
Earlier this week, JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report set a high bar for sector earnings with stronger-than-expected third quarter profits powered by deal-making fees in its investment banking division.
JPMorgan said earnings for the three months ending in September were pegged at $11.7 billion, or $3.74 per share, up 28.1% from he same period last year and well ahead of the Street consensus forecast of $3.00 per share. Removing the benefit of a $2.1 reserve release, as well as other one-off items, JPMorgan's first quarter profit was $9.6 billion.
Managed revenues rose 1.7% to $30.44 billion, just ahead of analysts' estimates of a $29.76 billion tally, while net interest income rose 1% to $13.2 billion. Investment banking fees, JPMorgan said, powered a 3% gain for non-interest revenues, which hit $17.3 billion.