Goldman Sachs rose more than 3% in pre-market trading! Q3 profits surged 45%, with stock trading revenue reaching a three-year high | Financial Report Insights

Benefiting from unexpected growth in trading business and a recovery in investment banking business, Goldman Sachs saw a 45% surge in profit in the third quarter, with both revenue and net interest income exceeding expectations.

Before the U.S. stock market opened on Tuesday, Goldman Sachs released its third-quarter financial report, with the following details:

Net revenue of $12.7 billion, a 7% year-on-year increase, surpassing the estimated $11.77 billion;

Profit of $3.987 billion, a 45% year-on-year surge;

Net interest income of $2.62 billion, also exceeding the estimated $1.84 billion;

Earnings per share of $8.40, compared to $5.47 in the same period last year, a 54% year-on-year increase, higher than the expected $6.89;

It is worth mentioning that Goldman Sachs' stock sales and trading business unexpectedly saw a significant increase, achieving its best quarterly performance in over three years, with fees collected by traders in all key business lines exceeding expectations.

After the financial report was released, Goldman Sachs' stock surged more than 3% before the U.S. market opened, with a 34% increase year-to-date, ranking first among U.S. banks and hitting a historical high on Monday.

Trading Revenue Exceeds Expectations, Investment Banking Business Recovers

Looking at the business segments, stock sales and trading business performed well, investment banking business exceeded expectations, but fixed income trading business declined:

Stock Sales and Trading Business: Revenue of $3.5 billion, surpassing the estimated $2.95 billion, marking the best quarterly performance since the first quarter of 2021, mainly due to the growth in derivative and cash product intermediary income;

Fixed Income Trading Business: Revenue declined by 12% to $2.96 billion, attributed to decreases in interest rates and commodity income. In August, the co-head of the commodities business, Xiao Qin, resigned after only a few months in office, at a time when the growth of this business had already slowed down.

Investment Banking Business: Revenue of $1.86 billion, better than the widely estimated $1.68 billion. M&A advisory revenue was $875 million. Goldman Sachs took the lead in this indicator after lagging behind competitor JP Morgan in the second quarter. Equity underwriting revenue was $385 million, and debt underwriting revenue was $605 million.

Asset and Wealth Management Business: Revenue of $3.75 billion, a 12% year-on-year increase. Management fee income grew by 9%. The bank reported that alternative investment business raised $16 billion, mainly related to credit strategies.

Additionally, Goldman Sachs incurred a $415 million loss due to General Motors terminating their credit card partnership and abandoning other small retail businesses. Barclays Bank stated on Monday that after Goldman Sachs failed in entering the consumer loan field, the company will take over General Motors' business. Affected by the exit of General Motors' credit card business, revenue from Goldman Sachs' consumer platform decreased by 32% to $391 million, resulting in a pre-tax loss of $559 million Although Goldman Sachs has a more focused business strategy, its return on equity has not yet reached its target of around 15%, with only one out of the past 10 quarters meeting this goal. In the three months ending in September, Goldman Sachs' return on equity was approximately 10.4%