Goldman Sachs (GS, Financial) has refocused on its core strengths in investment banking and institutional trading, leading to impressive Q3 2024 results. Despite divesting consumer assets like GreenSky and ending its credit card partnership with General Motors (GM, Financial), the company exceeded EPS and revenue forecasts. The Federal Reserve's interest rate cut and prospects of further reductions have boosted the M&A and new issue markets.
- GS's Global Banking & Markets segment saw net revenue grow by 7% to $8.55 billion. The firm maintained its #1 position in M&A and common stock offerings for the quarter. Advisory revenue increased by 5% year-over-year to $875 million, while equity underwriting fees surged by 25% to $385 million, thanks to a more active IPO market.
- Investment banking revenue rose 20% to $1.87 billion, driven by a 46% increase in debt underwriting revenue to $605 million, fueled by leveraged finance and investment-grade activities.
- Trading revenue was mixed, aligning with CEO David Solomon's forecast of a 10% decline due to weaker FICC conditions. FICC trading revenue fell 12%, but overall trading revenue increased nearly 2% year-over-year.
- Equity trading revenue increased by 25% to $385 million, bolstered by strength in derivatives and cash products.
- The Asset & Wealth Management segment reported a 16% rise in net revenues to $3.75 billion. Assets Under Supervision reached a record $3.10 trillion, with management and other fees hitting $2.62 billion.
Goldman Sachs's robust performance indicates a healthy business environment, even as expectations were high, reflected by a 7% stock rally since early October. This positive outcome also suggests favorable conditions for Morgan Stanley (MS, Financial), set to release its Q3 results soon.
