By Saeed Azhar and Niket Nishant
(Reuters) – Goldman Sachs' third-quarter profit beat estimates, boosted by a rebound in bond sales, stock offerings and mergers, sending its shares up more than 3% in pre-market trading. marketing.
He joined JPMorgan Chase (NYSE:), which also benefited from a revival in investment banking as corporate clients gained confidence in the economic outlook, spurring debt and equity offerings.
“Our performance demonstrates the strength of our world-class franchise in an improving operating environment,” CEO David Solomon said in a statement Tuesday.
Strong jobs and wage growth in the United States have highlighted the resilience of the economy, while an interest rate cut by the Federal Reserve has also encouraged companies to seek deals.
Investment banking fees rose 20% to $1.87 billion. Leveraged financing, which refers to loans made to risky companies as buyout funds, and investment-grade activity drove a jump in debt underwriting.
The share subscription also generated higher income, thanks to a large number of secondary share sales.
The bank also benefited from easier comparisons with the previous year, when it took significant writedowns in the consumer business and real estate investments.
“Goldman Sachs certainly moved forward with a big jump in earnings per share,” said Octavio Marenzi, chief executive of management consultancy Opimas. “Goldman Sachs had a good quarter, but it could have been brilliant.”
Income from fixed income, currencies and commodities trading fell 12%, while equity trading rose 18%.
WEIGHT OF PROVISIONS
Goldman, however, posted $397 million in provisions for credit losses, compared with $7 million a year ago, driven by higher charge-offs in its credit card portfolio.
The investment bank is still taking a hit from its ill-fated consumer business two years after its withdrawal. Goldman has since refocused on the traditional pillars of investment banking and trading.
The bank is exiting its credit card business with automaker General Motors (NYSE:), which has signed a deal with Barclays.
Goldman took a one-time hit of $415 million that included a writedown related to the transfer of GM's credit card business to Barclays.
Its card partnership with Apple (NASDAQ:) also faces an uncertain future, with JPMorgan in talks to replace Goldman as the tech giant's credit card partner.
Total earnings rose 45% to $2.99 billion, or $8.40 per share, for the three months ended Sept. 30, above expectations of $6.89, according to estimates compiled by LSEG.
Asset and wealth management, the unit that serves institutions and high-net-worth individuals, earned 16% more revenue than a year ago.
The bank oversaw a record $3.1 trillion in assets in the third quarter. Its workforce was 46,400, compared with 44,300 at the end of June and 45,900 a year earlier.
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