Goldman Sachs Group Inc.’s third-quarter profit fell 26% from a year ago, hit by a slowdown in deal-making and losses on the bank’s stakes in companies.

The bank on Tuesday reported $1.88 billion in net earnings on $8.32 billion in revenue, roughly in line with what analysts had expected. But its return on equity—a measure of how profitably it invests shareholders’ money—was just 9%, lower than peers, as it continues to pour money into new initiatives such as consumer banking, corporate-cash management and ultrafast trading...