Wall Street bank easily beats analysts' estimates for earnings and revenue in third quarter

This article is more than 7 years old

This article is more than 7 years old

Goldman Sachs easily beat analysts' estimates for earnings and revenue in the third quarter.

Net profit was $1.5bn (£931m), a turnaround from a loss a year ago. Back then, Goldman suffered as its clients pulled out of the market, scared off by the uncertainty caused by contentious budget negotiations in Congress and a downgrade of the US government's debt rating.

On a per-share basis Goldman earned $2.85, blowing away Wall Street's expectations. Analysts had been predicting $2.19, according to FactSet.

Revenue more than doubled, to $8.4bn from $3.6bn, and also beat estimates of $7.2bn. The bank enjoyed big jumps in revenue from underwriting stock and bond offerings and investment management.

The bank's investments in stock and bond securities came back from a loss a year ago and turned a profit, riding a wave of higher stock prices around the world. Trading in mortgages also propelled Goldman's results higher.

There were still signs of gaps in Goldman's armour, and its stock initially slipped after the results were announced.

Goldman continued to trim jobs and expenses in the quarter. Goldman shed about 1,600 jobs, or 5% of its workforce, compared with a year ago, and cut expenses like communications, occupancy and market development.

Trading in mortgage products increased the revenue the bank earned for helping clients execute trades, but other areas were weaker. Revenue from helping investors execute stock trades fell because of "significantly lower" commissions, fees and market volume, the bank said.

The bank made slightly less revenue from advising clients on mergers and acquisitions, strategy, and similar matters.

The bank also has a low bar for beating year-ago results.

In a statement, Goldman's CEO sounded a cautious note about the quarter.

Lloyd Blankfein called the quarter "generally solid in the context of a still challenging economic environment," adding that Goldman would "continue to be disciplined in managing our operations and capital."

Of its clients' appetite, the bank said, "broad market concerns persisted and levels of activity remained generally low."

The bank still managed to find more money to pay employees. Compensation expenses jumped 10% even though the number of employees fell.