Goldman Sachs reported a 66% increase in third-quarter profits that beat expectations on Friday, as Wall Street’s largest investment bank rode a record wave of M&A activity that also boosted the profits of other major US banks.
The Wall Street giant led by CEO David Solomon, which generates a third of its income from its investment bank through lucrative transaction advisory commissions, has reported an increase in advisory fees, as large companies and financial sponsors have embarked on a multitude of transformative deals. .
Net income applicable to common shareholders reached $ 5.28 billion in the quarter ended September 30, from $ 3.23 billion a year ago.
Earnings per share reached $ 14.93 from $ 8.98 a year earlier. Analysts on average expected earnings of $ 10.11 per share, according to Refinitiv’s IBES estimate.
Total revenue jumped 26% to $ 13.61 billion in the quarter
Global M&A volumes have broken all-time highs as advisers struggle to keep up with unprecedented transaction volumes.
More than $ 1.5 trillion worth of deals signed by the world’s largest investment banks in the September quarter, with Goldman comfortably leading the rankings of global M&A advice , according to data from Refinitiv.
Rankings rank financial services companies based on the amount of merger and acquisition costs they generate.
Global financial advisory revenues jumped 225% to $ 1.65 billion, while underwriting revenues jumped 33% to $ 1.90 billion.
Goldman’s investment bank had its second best quarter in its history, with revenue of $ 3.70 billion, thanks to strong advisory and underwriting fees.
Global Markets Activity, now home to trading activity and accounting for around 41% of overall revenue, reported revenue of $ 5.61 billion, up 23%.
Unlike competitors such as JPMorgan and Bank of America, Goldman has a relatively smaller consumer business, which has limited its exposure to defaults and allowed it to focus on investment banking.
As negotiators around the world drowned in a flurry of deals, Goldman also cashed in big bucks as companies rushed to raise capital, refinance debt and sell new stocks.
Shares of the investment bank rose nearly 2.5% in pre-market trading.