Goldman Sachs Group Inc (NYSE: GS) reported better-than-anticipated fiscal 2021 third-quarter earnings and revenues, aided by the exceptional performance of the Investment Banking (facilitates merger and acquisition) division. Following impressive results, the stock ended Friday’s trading at $406.07, up $14.87 or 3.80% from the prior close.
The New York-based bank reported third-quarter revenues of $13.608 billion, an increase of 26% from $10.781 billion in the similar period last year.
For the quarter ended September 30th, 2021, the bank posted a net income of $5.284 billion, or $14.93 per share, compared with $3.233 billion, or $8.98 a share, in the quarter ended September 30th, 2020.
Analysts polled by Refinitiv had anticipated the company to report earnings of $10.18 per share on revenues of $11.68 billion.
Commenting on the results, Goldman Sachs CEO
Segment-wise,
- Investment banking revenues increased 88% y-o-y to $3.700 billion and surpassed StreetAccount estimate by $750 million. The figure reflects the second-highest quarterly net revenues for the division. Specifically, Financial Advisory revenues surged 225% to $1.648 billion. Likewise, corporate lending skyrocketed 334% to $152 million. Underwriting revenues increased 33% to $1.90 billion.
- Global market revenues were $5.611 billion, an increase of 23% on a year-on-year basis. In particular, the equities financing business jumped 102% to $1.183 billion. Also, equities trading revenue grew 35% to $1.92 billion, but missed the $2.08 billion estimate of analysts. However, bond trading generated revenues of $2 billion and eclipsed StreetAccount’s estimate of $1.97 billion.
- Asset management revenues fell by 18% y-o-y to $2.279 billion. Under this division, equity investments fell by 34% to $935 million. Lending and debt investments declined 12% to $520 million.
- Consumer & Wealth management revenues were $2.018 billion, up 35% from last year, and eclipsed the consensus estimate of $1.79 billion. For the first time, this division recorded quarterly revenues of over $2 billion. The wealth management division posted revenue growth of 40% to $1.636 billion. Under wealth management, private banking and lending grew 45% to $292 million. Consumer banking revenues grew 17% to $382 million.
Operating expenses rose 6% to $6.59 billion in Q3 2021, primarily due to a rise in technology expenses, professional fees, transaction-based expenses, and market development expenses.
Net provisions for litigation and regulatory proceedings fell to $52 million in Q3 2021, from $256 million in Q3 2020.
The company’s Board has declared a dividend of $2 per share payable on December 30th, 2021. During the third quarter, the bank returned $1.70 billion to shareholders, including cash dividends of $700 million and $1 billion in the form of share repurchases.
The quarterly earnings beat will likely keep the stock of Goldman Sachs slightly bullish in the short term.
The historical price chart shows that the stock of Goldman Sachs is moving along the ascending trend line. Additionally, the stock is also having multi-month support at 360. The Chaikin money flow indicator also has a positive reading. Therefore, we are expecting the stock to stay at an uptrend in the coming days.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
