Following a weaker-than-expected Q2 earnings report, Goldman Sachs came back with a vengeance in Q3. The iconic US investment bank posted third-quarter earnings per share of $9.68. The figure obliterated estimates for a $5.54 EPS.
Revenues were also higher than expected at $1078 billion, versus estimates of $9.45 billion. Revenues rose 30% on the same quarter a year earlier while the EPS beat marks a new quarterly record.
Reduced Credit Loss Provisions
As we have seen with other leading US banks, Goldman had set aside a sizeable amount for expected credit losses, linked to the pandemic. However, the figure was reduced over Q3 amidst the ongoing economic recovery. Goldman held just $278 million in buffer capital, down from $291 million a year earlier and the mammoth $1.59 billion in Q2.
Commenting on the bank’s operations over the period, the firm’s CEO David Solomon said:
“Our ability to serve clients who are navigating a very uncertain environment drove strong performance across the franchise, building off a strong first half of the year. As our clients begin to emerge from the tough economy brought on by the pandemic, we are well-positioned to help them recover and grow, particularly given market share gains we’ve achieved this year.”
Trading Revenues Soar
The main driver of revenue growth over the quarter was the bank’s bumper trading desk performance. Trading revenues came in at $4.55 billion, up 29% from the same quarter a year prior.
Fixed income, currencies and commodities sales and trading revenues were up $2.5 billion while equities trading rose $2.05 billion. Combined, trading revenues accounted for 42% of the firm’s total quarterly revenues.
Elsewhere, the firm’s core investment banking business rose 7% to $1.97 billion while consumer banking revenues jumped 50% to $236 million. Asset management revenues were also higher by 71% on the same period a year earlier, rising to $2.77 billion.
In all, this was a solid quarter for Goldman Sachs and reflects a firm improvement in the group’s performance following the passing of the height of the pandemic over Q2.
Goldman Capped At Bearish Trend Line
Goldman’s shares were recently capped at a test of the bearish trend line from 2020 highs. However, while price holds above the 196.37 level support, the focus is on the continued upside in the near term. The 222.59 level is the key barrier for bulls to break.
To the downside, any break of the 196.37 level will turn the focus to support at the 188.53 level next.