Goldman Sachs Group reported much bigger profits yesterday than Wall Street had been expecting, helped by a substantial rebound in bond trading. Goldman, the fifth-largest US bank by assets, has historically been more reliant on bond trading than its peers, but the business has been suffering for years from weak volumes and costly financial reform rules.
However, the third quarter was a good one for bond trading revenue across Wall Street, thanks to Britain’s surprise vote to quit the European Union and uncertainty about monetary policy in the US and elsewhere. Goldman joined JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp in reporting stronger results from the business.
Goldman’s revenue from trading fixed-income securities, commodities and currencies jumped 34%, to $1.96bn, from the third quarter of 2015. It was the biggest contributor to overall net revenue, which was also helped by big gains in Goldman’s investing and lending business.
The bank generated $2.1bn in net income for common shareholders, up 58% from the year-earlier period. It was the bank’s second straight rise in quarterly profit after four quarters of decline.
Earnings per share rose to $4.88 from $2.90, partly because Goldman bought back roughly 22mn of its own shares over that time. Analysts on average had expected earnings of $3.82 per share, according to Thomson Reuters I/B/E/S.
Chief executive Lloyd Blankfein described it as “solid performance” across Goldman’s franchise.
Goldman’s shares, which have fallen 6.2% this year, were up 1.9% at $172.21 in early trading.