How Goldman Sachs Won Big on Earnings

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Goldman Sachs Group Inc. (NYSE: GS) reported its third-quarter earnings results before the markets opened on Tuesday. The company posted $4.88 in earnings per share (EPS) and $7.55 billion in non-interest revenue, versus consensus estimates from Thomson Reuters of $3.79 in EPS on revenue of $7.42 billion. The same period of last year reportedly had EPS of $2.9 billion and $6.86 billion in revenue.

Assets under supervision increased to a record $1.35 trillion, including net inflows of $14 billion in long-term assets under supervision.

Book value per common share increased by 2.6% during the quarter, and 6.0% during the year to date, to $181.25. Basic shares decreased by 1.8% during the quarter to a record low of 418.8 million.

The firm maintained strong capital ratios and liquidity. The firm’s Common Equity Tier 1 ratios as calculated in accordance with the Standardized approach and the Basel III Advanced approach were 14.0% and 12.4%, respectively, and the firm’s global core liquid assets were $214 billion as of September 30, 2016.

In terms of the business segments, Goldman Sachs reported:

  • Investment Banking revenues decreased 1% year over year to $1.54 billion.
  • Investment Management revenues increased 4% to $1.39 billion.
  • Commissions and Fees decreased 12% to $753 million.
  • Market Making increased 57% to $2.72 billion.
  • Other Principal transactions increased 114% to $1.16 billion.

Lloyd C. Blankfein, chairman and CEO of Goldman Sachs, commented:

We saw solid performance across the franchise that helped counter typical seasonal weakness. We continue to manage our balance sheet conservatively and are benefiting from the breadth of our offerings to clients.

Shares of Goldman Sachs closed Monday down nearly 1% at $169.00, with a consensus analyst price target of $183.20 and a 52-week trading range of $138.20 to $199.90. Following the release of the earnings report, the stock was up 1.7% to $171.88 in early trading indications Tuesday.