Goldman Sachs Group (GS) shares jumped higher Tuesday after the investment bank posted firmer-than-expected third quarter earnings, declared a $2.50 dividend and unveiled plans to restructure its four business divisions.
Goldman said earnings for the three months ending in September were pegged at $8.25per share, down 44.7% from the same period last year but firmly ahead the Street consensus forecast of $7.69 per share. Group revenues, Goldman said, fell 12% to $11.98 billion, but again topped analysts' forecasts of an $11.41 billion total.
Investment banking revenues fell 57% from last year to $1.58 billion, Goldman said, but that partly offset by a a firm increase in global markets revenues, which were up 10.5% at $6.2 billion.
Merger activity is down around 55% from last year's levels, according to Refinitiv data, with just $692 billion in deals completed - the lowest total since the second quarter of 2020 and the biggest year-on-year decline since 2009.
Goldman also unveiled reported plans to restructure is business reporting into three separate divisions -- down from four -- that include asset and wealth management, global banking and markets and platform solutions.
“Goldman Sachs’ third quarter results reflect the strength, breadth and diversification of our global franchise," said CEO David Solomon. "Against the backdrop of uncertainty and volatility in the markets, we continue to prudently manage our resources and remain focused on risk management as we serve our clients. Importantly, we are confident that our strategic evolution will drive higher, more durable returns and unlock long-term value for shareholders."
"In January 2020, we outlined our strategy in clear and direct terms, introducing a plan to grow and strengthen our core businesses, diversify our products and services, and operate more efficiently as we drive higher, more durable returns," he added. "Today, we enter the next phase of our growth, introducing a realignment of our businesses that will enable us to further capitalize on the predominant operating model of One Goldman Sachs as we better serve our clients.”
Goldman Sachs shares were marked 2.8% higher in mid-day trading following the earnings release to change hands at $315.40 each, trimming the stock's six-month decline to around 4.5%.
Goldman also detailed plans to set aside more $515 million to cover the potential for bad loans in a weakening domestic -- and global economy -- after JPMorgan (JPM), Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) booked a collective $1.8 billion in so-called credit reserves on Friday and Monday.
Last week, JPMorgan said earnings for the three months ending in September were pegged at $3.32 per share, firmly ahead of Street forecasts, as net interest income rose 33% to $17.6 billion, offsetting a 43% slump in investment banking fees, which came in at $1.7 billion.
Citigroup was also able to offset the dealmaking slump with stronger-than-expected net interest income gains and a 40% jump in revenues from its global Treasury and trade solutions business.
Citigroup said earnings for the three months ending in September were pegged at $3.5 billion, or $1.63 per share, down 24.1% from the same period last year but well ahead of the Street consensus forecast of $1.42 per share.
