Goldman said that "the ratio of compensation and benefits to net revenues for the first nine months of 2012 was 44.0%, consistent with the first nine months of 2011," and that third-quarter non-compensation expenses of $2.38 billion were up 4% from the second quarter, but down 13% from the third quarter of 2011, with the decline mainly reflecting "lower brokerage, clearing, exchange and distribution fees which principally reflected lower transaction volumes in Equities, lower expenses related to the U.K. bank levy (approximately $100 million related to the enactment of the U.K. bank levy was included in other expenses in the third quarter of 2011) and the impact of expense reduction initiatives."

Goldman Sachs CEO Lloyd Blankfein said in the company's earnings press release that "this quarter's performance was generally solid in the context of a still challenging economic environment."

During Goldman's earnings conference call, incoming CFO Harvey Schwartz said "we continue to be focused on our cost-saving initiatives, and year to date, our non-compensation expenses are running 10% lower than the first three quarters of 2011."

Goldman repurchased 11.8 million shares during the third quarter for $1.25 billion, with year-to-date share buybacks totaling $3.11 billion, as of Sept. 30.

Goldman's annualized third-quarter return on average common equity was 8.6%, and Carrier said that the firm was in a strong position that "could add roughly 6-7% to its return on tangible equity, or ROTE over time, taking it to the mid-teens."

Carrier's price objective for Goldman's shares I based on a price-to-tangible book multiple of "1.0x our forward tangible book estimate, which is in line with our forecasted ROTE of roughly 10%."

"Longer term, we view the firm as innovative and well positioned to benefit from a pick-up in revenues and market share gains (particularly in FICC)," he said.

GS Chart GS data by YCharts

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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