Goldman Sachs Group Inc. on Friday said its third-quarter earnings vaulted more than 60% with a big boost from its investment banking unit as the Dow component benefited from brisk capital raising and other deal-making on Wall Street.
In another bright spot, the bank’s global markets revenue turned in a particularly strong beat of analyst projections, and the banks assets under management set a fresh record.
The bank also forecast an “increased likelihood” of monetary policy tightening in the near term due to inflationary pressures. Any rate hikes are seen as beneficial to lenders that have seen their loan margins pressured by low interest rates.
CEO David Solomon said the firm “saw strong operating performance” and that its “opportunity set continues to be attractive across all of our businesses.”
Goldman Sachs /zigman2/quotes/209237603/composite GS -1.24% shares rose 2.6% in midday trades, enough to be the top performer among the Dow Jones Industrial Average’s /zigman2/quotes/210598065/realtime DJIA -0.17% components.
CFRA analyst Kenneth Leon reiterated a strong buy rating on Goldman Sachs and raised his 12-month price target to $470 a share from $445 a share. “Best-in-class, GS is executing on all cylinders with industry leading performance and gaining market share and growing assets under supervision,” he said. “And yet, GS trades at significant 2022 discount to S&P 500 or lead asset managers like Schwab /zigman2/quotes/201281754/composite SCHW -2.06% and BlackRock /zigman2/quotes/207946232/composite BLK -2.10% .”
The Wall Street giant said its net income rose to $5.28 billion, or $14.93 a share, from $3.23 billion, or $8.98 a share, in the year-ago period.
Net revenue increased to $13.6 billion from $10.8 billion. Net interest income climbed to $1.56 billion from $1.08 billion.
Goldman Sachs soundly beat the consensus analyst estimates for earnings of $10.14 a share and revenue of $11.72 billion, according to a survey by FactSet.
Goldman’s investment banking unit nearly doubled its revenue to $3.55 billion from $1.93 billion, and ahead of the analyst estimate of $2.6 billion.
The firm’s global markets revenue increased to $5.61 billion from $4.55 billion. The latest figure blew past the FactSet estimate of $3.70 billion.
During the third quarter, Goldman Sachs repurchased $1.0 billion of stock. Its headcount at the end of the third-quarter was 43,000, up 5.4% from the end of the second quarter.
Its third-quarter provision for credit losses of $175 million compared with $278 million a year ago.
Assets under supervision increased $67 billion during the quarter to $2.37 trillion, a record. Firmwide management and other fees of $1.95 billion also set a record.
Turning to M&A, Goldman acquired two businesses in the quarter: NN Investment Partners and GreenSky Inc. Both deals are expected to close by the end of the first quarter.
Goldman Sachs shares are up 48.3% so far this year, compared with an increase of 18.2% by the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.84% and a rise of 38% by the KBW Bank Index /zigman2/quotes/210598427/realtime BKX -2.50% .