Goldman Q3 Earnings Falls on Weak Investment Banking Offset by Higher Bond Trading Fees

Scott Peters
18 Oct, 2022
New York City

Goldman Sachs Group Inc increased 3.2% to $316.38 after the financial services provider reported lower but better-than-expected earnings supported by bond trading activities. 

Net revenues in the quarter declined to $11.975 billion from $13.608 billion a year ago. 

Net income declined to $3.06 billion from $5.4 billion a year ago and diluted earnings per share fell to $8.25 from $14.93. 

 

Segment Breakdown 

Global markets trading in bonds and equities dominated financial company's quarterly results. 

Global markets, which includes commodities and currencies, increased 11% from a year ago but declined 4% from the previous quarter to $6.2 billion. 

Net revenue in bonds, currencies and commodities increased 41% to $3.53 billion, primarily reflecting significantly higher net revenues in intermediation or brokerage fees, driven by significantly higher net revenues in interest rate products and currencies, and higher net revenues in commodities and credit products, partially offset by significantly lower net revenues in mortgages.

Revenues in the equities brokerage business declined 14% to $2.68 billion. 

Net revenue in asset management unit declined 20% from a year ago and jumped 68% from the previous quarter to $1.82 billion, primarily reflecting lower net revenues in equity and debt products offset by higher management fees. 

Weak market environment also impacted investment banking unit fees. 

Investment banking revenues plunged 57% from a year ago and 26% lower than in the previous quarter to $1.58 billion, reflecting weak advisory and underwriting fees. 

Consumer and wealth management fees increased 18% from a year ago and 9% from the previous quarter to $2.38 billion. 

 Net revenues in wealth management was nearly unchanged at $1.63 billion and consumer banking revenues nearly doubled to $744 million reflecting higher credit card balances and higher deposit spreads. 

Provision for credit losses increased to $515 million from $175 million a year ago but fell from $667 million in the second quarter. 

The allowance for credit losses was $5.59 billion as of September 30, 2022. 

 

Geographic Breakdown 

Americas revenues accounted for 63%, Europe and Middle East 26% and Asia accounted for 11% of total revenues in the third quarter. 

 

Book Value 

Book value per common share increased 2.1% during the quarter and 8.4% during the first nine months of 2022 to  $308.22.