Goldman Sachs Group Inc.’s third-quarter earnings more than tripled from the depths of the financial crisis as income from the company’s trading operations offset a drop in its investment banking business.
Goldman also had $5.35 billion in compensation expenses during the July-September period.
Goldman earned $3.03 billion, or $5.25 per share, easily beating analysts’ expectations for a profit of $4.24 per share. The bank earned $810 million, or $1.81 per share during its fiscal third quarter last year, which ended in August. During the peak of the credit crisis last fall, Goldman became a bank holding company and changed to calendar quarterly reporting periods.
The company said bond, commodities and currency trading buoyed its profits for the second straight quarter.
Investment banking revenue, traditionally the foundation of the company’s business, fell to $899 million in the third quarter. The results were 31 percent worse than similar quarter last year as the credit crisis was worsening and 38 percent worse than the most recent quarter.
Goldman attributed the drop to a decline in bond underwriting as the still troubled credit markets limited the amount that companies could borrow to complete deals. The investment banking business would have fared even worse were it not for strong stock underwriting activity. As the stock market has rebounded, Goldman was able to leverage its strong reputation to help companies issue new shares to take advantage of the rising market.
Lloyd Blankfein, the company’s chairman and CEO, said Goldman is starting to see a rebound across many of its businesses even as the broader economy and consumers continue to struggle with rising unemployment and mounting loan losses.
“Although the world continues to face serious economic challenges, we are seeing improving conditions and evidence of stabilization, even growth, across a number of sectors,” Blankfein said in a statement. (AP)
