Driven by unexpected growth in trading business and the recovery of investment banking business, Goldman Sachs' third-quarter profit soared by 45%, with both revenue and net interest income exceeding expectations.

In pre-market trading on Tuesday, Goldman Sachs released its third-quarter financial report. Specifically,

Net revenue of $12.7 billion, a 7% year-on-year increase, better than the estimated $11.77 billion;

Profit of $3.987 billion, a soaring 45% year-on-year;

Net interest income of $2.62 billion, also exceeding the estimated $1.84 billion;

Earnings per share of $8.40, compared to $5.47 in the same period last year, a 54% increase year-on-year, higher than the expected $6.89;

It is worth mentioning that Goldman Sachs' stock sales and trading business unexpectedly surged in the third quarter, achieving the best quarterly performance in over three years, with fees collected by traders in all key business areas exceeding expectations.

After the financial report was released, Goldman Sachs rose nearly 3% in pre-market trading, up 34% year-to-date, leading Bank of America, and reaching a historical high on Monday.

Trading revenue exceeded expectations, investment banking business rebounded.

Looking at the business segmentation, stock sales and trading business performed well, investment banking business exceeded expectations, but fixed income trading business declined:

Stock sales and trading business: Revenue of 3.5 billion US dollars, exceeding the estimated 2.95 billion US dollars, achieving the best quarter performance since the first quarter of 2021, mainly due to the growth in intermediary income from derivatives and cash products;

Fixed income trading business: Revenue declined by 12% to 2.96 billion US dollars, due to the decrease in interest rates and revenue from csi commodity equity index. In August, the bank announced that Qin Xiao, co-head of the csi commodity equity index business, left the position after only a few months, at a time when growth in this business had already slowed down.

Investment banking business: Revenue of 1.86 billion US dollars, better than the general estimate of 1.68 billion US dollars. . Merger advisory revenue was 0.875 billion US dollars. Goldman Sachs, after lagging behind JPMorgan in the second quarter, is leading in this indicator. Equity underwriting revenue was 0.385 billion US dollars, and debt underwriting revenue was 0.605 billion US dollars.

Asset and wealth management business: Revenue of 3.75 billion US dollars, a 12% increase from the same period last year. Management fee revenue increased by 9%. The bank reported that alternative investment business raised $16 billion, mainly related to crediting-related strategies.

In addition, Goldman Sachs incurred a loss of 0.415 billion US dollars due to the termination of the credit card partnership with General Motors and the abandonment of other small retail business. Barclays announced on Monday that after Goldman Sachs failed in entering the consumer loan field, the company will take over the General Motors business. Affected by General Motors' exit from the credit card business, revenue from Goldman Sachs' consumer platform business decreased by 32% to 0.391 billion US dollars, resulting in a pre-tax loss of 0.559 billion US dollars.

Despite Goldman Sachs' more focused business strategy, its return on equity has not yet reached its target of around 15%, achieving this target only once in the past 10 quarters. As of the three months ending in September, Goldman Sachs' return on equity was approximately 10.4%.

Editor/Lambor