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Goldman Sachs crushes estimates on strong bond trading

Goldman Sachs posted third quarter earnings that crushed expectations. Yahoo Finance's Julia La Roche shares the details.

Video Transcript

ADAM SHAPIRO: For Goldman Sachs, asset management and trading are bread and butter. And I want to quote from your article on Yahoo Finance, Julia, where you said, quote, "blew away Wall Street estimates." Tell us more about Goldman.

JULIA LA ROCHE: Yeah, that's right, Adam. Well, when you look at Goldman Sachs' third quarter, specifically looking at the EPS, the earnings per share, it came in at $9.68. That tops analysts' expectations of $5.57. Keep in mind, that is a record quarter for Goldman Sachs now. Net revenues came in at 10.78 billion, topping out those expectations of 9.45 billion.

And when you're talking about the bread and butter business, it's the capital of markets business for this Wall Street giant that continued to shine bright as well as the investment banking business. But let me just run you through real quick some of the revenues we were seeing for the quarter. For trading, it came in at 4.55 billion, that is up 29% from just a year ago.

The fixed income currency and commodities sales and trading business hit 2.5 billion in revenue, while equities trading generated 2.05 billion. Collectively, those two businesses account for 42% of the firm's revenue. And also, I mentioned that investment banking also continues to be a bright spot.

And one of the other areas when you think of Goldman that a lot of folks have been paying attention to lately has been that consumer and wealth management business, which posted revenues of 1.49 billion in the quarter. That is a record for the consumer banking business. A lot of that was, of course, driven by credit card loan balances.

One thing to note, when this came up on the earnings call, Adam, the consumer deposits grew to 96 billion. That grew by about 4 billion from the prior quarter. Maybe a little bit slower, having to do with some things going on in the UK but also the lower rates, just given the extremely low interest rate environment.

And then just another thing I think is worth bringing up, we talked about a Reuters report earlier about Goldman's medium-term goals that were set at the investor day earlier. That came up on the earnings call. And CEO David Solomon called that report false and that they haven't had discussions internally about changing those goals.

And if anything, on the call, they are talking about maybe talking about new opportunities that have come up because of the pandemic. These are three-year goals. We're a little less than a year in at this point. So I suppose, look for more of an update on the fourth quarter earnings call in January to see what they do there.