Goldman Sachs is a New York-based investment banking firm that engages in global investment banking, securities, investment management, and other financial services, primarily with institutional clients. Founded in 1869, the firm is recognised as one of the most prestigious institutions in the world, although its reputation has suffered after the financial sector drew fire since the global financial crisis.
Goldman third-quarter profit doubles on investment gains
Goldman Sachs Group reported a third-quarter profit, reversing a year-earlier loss, as revenue more than doubled due to gains in stocks and bonds the investment bank holds as investments.
Goldman on Tuesday posted earnings applicable to common shareholders of US$1.5 billion, or US$2.85 per share, compared with a loss of US$428 million, or 84 cents per share, a year earlier. Net revenue rose to US$8.35 billion from US$3.6 billion.
Analysts had expected, on average, earnings of US$2.12 per share, according to Thomson Reuters I/B/E/S.
Most of Goldman’s revenue gains came from its investing and lending division, which consists of stocks and bonds it holds as investments. The value of those assets rose after the US Federal Reserve unveiled a new program to boost liquidity, but trading volumes and deal activity were still muted.
The bank reported US$1.8 billion in revenue from that business; a year earlier, the investing and lending division reduced overall revenue by US$2.5 billion.
In a statement, Goldman Chief Executive Lloyd Blankfein described the bank’s third-quarter performance as “generally solid.”
Goldman shares were up 50 cents to US$125.00 in premarket trading.
The bank raised its quarterly dividend to 50 cents per share from 46 cents.
The value of Goldman’s debt rose during the latest quarter, requiring the company to take a charge that reduced earnings by US$370 million.
It took a similar accounting charge in the last year third quarter, as well as a charge for buying back preferred stock from billionaire investor Warren Buffett.