Goldman Sachs said it made $ 5.4 billion in third-quarter profit, or $ 14.93 per share. Analysts were forecasting earnings of $ 10.18 per share. Revenue also exceeded expectations, rising 26% from a year ago to $ 13.6 billion, well above the estimate of $ 11.7 billion.
Actions of Goldman Sachs ( was up almost 4% on the news. The stock, which is now up 54% this year, is the best performing Dow Jones for 2021. )
Goldman’s results raised the Dow Jones by more than 380 points, or 1.1%, on Friday. The Dow Jones ended the week with a gain of 1.6% and is now less than 1% of the all-time high it reached in August.
The S&P 500 jumped 0.8% on Friday and closed up 1.8% for the week while the Nasdaq rose 0.5%. and ended the week up more than 2%.
The good figures of financial companies come from their investment banking activities, thanks to a recovery in merger activity and strong IPO demand.
To that end, Goldman Sachs said on Friday that its investment banking income climbed 88% from a year ago to $ 3.7 billion, and the company predicts a continued increase in this segment of ‘activity.
“Given current levels of M&A announcements and continued healthy activity among financial sponsors, we expect acquisition financing activity to remain high,” said Stephen Scherr, Managing Director Goldman Sachs Financial, during a conference call with analysts.
“Despite significant levels of completed transactions, our investment banking order book nonetheless ended the quarter significantly higher than year-end levels,” he added.
Nonetheless, Goldman Sachs has issued some caveats about the outlook for inflation. The bank said in its presentation of the results that there was an “increased likelihood of monetary policy tightening in the near term, reflecting inflationary pressures.”
Translation: The Federal Reserve is expected to start cutting or cutting back on its bond buying program in the coming months. Then he will likely look to raise interest rates as early as the end of next year.
Goldman Sachs CEO David Solomon admitted that inflation has crept into the economy. But much like JPMorgan Chase boss Jamie Dimon, Solomon has suggested that paying people more is a good deal to have at a time when business is booming.
“There is wage inflation everywhere in every aspect of every business right now. We are extremely focused on it. We have a pay-for-performance culture, and there’s no question that people perform well, ”Solomon said on the conference call.
But he added that “we are very, very comfortable managing this in a way where we can show real operating leverage to our shareholders given our performance, and at the same time pay our employees exceptionally. for outstanding performance. “
“We’re on top, we feel good,” Solomon concluded.