Goldman Sachs beats earnings expectations thanks to a rise in investment banking

Goldman Sachs Wall Street’s earnings beat Wall Street’s third-quarter expectations on Tuesday, as its investment bankers earned higher advisory fees and rising markets boosted revenue from managing client assets.

The bank’s forecast for a fantastic year for dealmaking has come true as companies revive merger and listing plans.

Goldman’s investment banking fees rose 42% to $2.66 billion in the quarter ended Sept. 30 from a year ago. Analysts had expected a 14.3% increase, according to the average estimate compiled by LSEG.

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tape	protection	last	It changes	% changes
A	Goldman Sachs Group Inc.	786.78	+22.42	+2.93%

A Goldman executive said the company advised on the announced $1 trillion Mergers and acquisitions Year-to-date, that’s $220 billion more than its next closest competitor.

It advised Electronic Arts on its $55 billion sale to a consortium of private equity firms and the Saudi Public Investment Fund this year, and also advised Holcim on the sale of its North American Amrize business, which is now valued at $26 billion.

Goldman also advised Fifth Third Bancorp, which agreed this month to buy regional bank Comerica in a $10.9 billion deal to create the ninth-largest U.S. bank.

tape	protection	last	It changes	% changes
Essam	Electronic Arts Company	200.29	+0.27	+0.13%
Fitb	Fifth Third Bancorp	42.20	+0.73	+1.76%
Capital Market Authority	Comerica Corporation	77.37	+1.50	+1.98%

High consulting fees

The growth was driven by a 60% rise in advisory fees, while debt and equity underwriting fees also rose. Rival JPMorgan Chase also reported strong investment banking numbers.

Goldman shares fell 1.8% in premarket trading after the results. Shares were up 37% year-to-date through Monday, reflecting a rebound in deal making.

“This quarter’s results reflect the strength of our customers’ franchise and focus on executing on our strategic priorities in an improving market environment,” CEO David Solomon said in a statement.

“We know that conditions can change quickly and so we continue to focus on strong risk management,” he said, echoing the cautious optimism of JP Morgan CEO. Jamie Damon.

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Global M&A volumes during the first nine months of the year exceeded $3.43 trillion, nearly 48% of which was in the United States, according to data from Dealogic.

The period also saw the highest average M&A volume globally and in the US since 2015, in line with Solomon’s predictions at the Reuters Next conference last year.

Goldman was among the book-running managers involved in notable initial public offerings this quarter, including design software company Figma, Swedish fintech firm Klarna, and aerospace technology company Firefly Aerospace.

tape	protection	last	It changes	% changes
fig	Figma	61.82	-2.46	-3.83%
clear	Klarna Group plc	38.18	-0.91	-2.33%
Travel	Firefly Aerospace Inc. USD0.0001	28.38	-1.50	-5.02%

Total quarterly profit was $4.1 billion, or $12.25 per share Wall Street Expectations of $11 per share.

“It is clear that the capital markets machine has shifted into gear, with strong share prices, lower regulatory burden and the prospect of lower interest rates likely to keep the momentum going,” said Stephen Biggar, banking analyst at Argus Research.

Goldman executives have been increasingly optimistic about closing deals in recent months, with Solomon saying in September that the bank had one of its busiest weeks for initial public offerings in more than four years.

Focus on asset and wealth management

Revenues from asset and wealth management rose 17% to $4.4 billion, marking the first quarterly jump for this sector this year. This reflects record highs in management fees, as well as private banking and lending revenues.

This business is a key priority for Goldman as it seeks more stable fee income, offsetting fluctuations in its advisory and trading businesses.

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Goldman said last month that it would take a stake worth up to $1 billion in T. Rowe Price, as part of a partnership to tap the asset manager’s retirement funds to buy alternative assets.

tape	protection	last	It changes	% changes
Consider	T. ROWE PRICE GROUP INC.	105.36	+3.93	+3.87%

Regulated assets rose to $3.45 trillion, resulting in a 12% increase in management fees.

Goldman Sachs allocated $339 million in provisions for credit losses, compared to $397 million a year ago. The rulings were mainly related to him credit card file.

Sustainable business flexibility

Wall Street trading desks reaped the benefits of record volatility as clients reorganized their portfolios to keep up with changes in president Donald Trump Trade, foreign and financial policies.

However, the third quarter remained one of the quietest quarters on Wall Street in nearly six years, as a Federal Reserve interest rate cut and aggressive investment in artificial intelligence pushed major U.S. stock indexes to record levels.

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However, Goldman’s equity trading revenue rose 7% to $3.74 billion, helped by higher financing income, which offset lower revenue from cash stocks.

Fixed income, currency and commodities reached $3.47 billion, 17% higher than last year.