The investment banking giant Goldman Sachs had a huge Q3.
Earnings came in at $US4.57 per share, crushing expectations for $US3.21 per share.
Investment banking revenue surged 26% to $US1.46 billion. This helped bring the firm’s net revenue to $US8.39 billion, which was much higher than the $US7.83 billion expected by analysts.
“The combination of improving economic conditions in the US and a strong global franchise continued to drive client activity across our diverse set of businesses,” CEO Lloyd Blankfein said. “While conditions and sentiment can shift quickly, the strength of our transaction backlog indicates our clients’ desire to pursue and execute their strategic plans for growth.”
Goldman is hiring. The firm’s staff increased 3% during the quarter. “The accrual for compensation and benefits expenses was $US2.80 billion for the third quarter of 2014, 18% higher than the third quarter of 2013, reflecting an increase in net revenues,” management said. “The ratio of compensation and benefits to net revenues for the first nine months of 2014 was 40.0%, compared with 43.0% for the first half of 2014 and 41.0% for the first nine months of 2013. “
As expected, trading revenues fell. Fixed income, currency, and commodities client execution revenues fell 2% from Q2 to $US2.17 billion. Equities client execution revenues fell 11% to $US429 million.
Shares are down modestly in premarket trading.