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Goldman Sachs beats earnings estimates, but FICC is still weak

Goldman Sachs (GS) reported stronger-than-expected third-quarter earnings results, driven by its investment banking business.

The bank delivered adjusted earnings per share of $6.28 beating analysts’ expectations of $5.38. Revenue for the quarter came in at $8.65, topping estimates of $8.36 billion.

That brings the first nine months of net revenues to $28.08 billion, 17% higher than the same period a year ago and the highest in 8 years.

Across the businesses, the results were mixed.

Trading revenue for the third quarter came in at $3.1 billion versus estimates of $3.12 billion. Breaking that down further, FICC sales and trading revenue came in light at $1.31 billion, missing estimates of $1.45 billion. The bank attributed the slowdown in FICC to “significantly lower net revenues in interest rate products and lower net revenues in credit products and mortgages” while operating in an environment “characterized by low client activity amid low levels of volatility.”

David Solomon officially takes over as Goldman Sachs’ CEO, marking the next generation of leadership for the 149-year-old bank.

Meanwhile, revenue from equities sales and trading came in at $1.79 billion, topping estimates of $1.73 billion.

Revenues for investment banking came in at $1.98 billion, beating estimates of $1.75 billion.

Within investment banking, net revenues for underwriting were $1.06 billion, 20% higher than the same quarter a year ago. The was driven by initial public offerings, but offset by lower demand for debt underwriting, the bank noted.

Investment management was another bright spot for the bank with the business posting revenues of $1.7 billion, 12% higher than the same period a year ago. The bank said the increase was “primarily due to higher management and other fees.” The division saw an increase in $37 billion in assets under management and oversaw $1.55 trillion at the end of the quarter.

During the quarter, Goldman’s long-time leader Lloyd Blankfein passed the torch to his successor David Solomon.

“We delivered solid results in the third quarter driven by contributions from across our diversified client franchise,” Solomon said in a statement. “Year-to-date earnings per share is the highest in our history and year-to-date return on equity is the highest in nine years, notwithstanding our continued investment in growth opportunities. We remain well positioned to continue delivering for our clients and shareholders.”

On the earnings call, investors will look for an update for Marcus by Goldman Sachs, the two-year-old online consumer lending and savings arm.

Shares of Goldman were last trading up less than 1% in the pre-market, paring some of its earlier gains.


Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter. Send tips to laroche@oath.com.