Goldman Sachs thrives on global dealmaking frenzy to post bumper profit

By Kitco News / October 15, 2021 / www.kitco.com / Article Link

Oct 15 (Reuters) - Goldman Sachs Group Inc (GS.N) reported a 66% surge in third-quarter earnings that swept past expectations on Friday, as Wall Street's biggest investment bank rode a record wave of M&A activity that has also boosted profit for other big U.S. banks.

Net earnings applicable to common shareholders rose to $5.28 billion in the quarter ended Sept. 30, from $3.23 billion a year ago.

Earnings per share rose to $14.93 from $8.98 a year earlier. Analysts on average had expected a profit of $10.11 per share, according to the IBES estimate from Refinitiv.

Goldman, which generates a third of its revenue from its investment bank through lucrative fees from advising on deals, reported a surge in advisory fees, as large companies and financial sponsors embarked on a slew of transformative deals.

Total revenue surged 26% to $13.61 billion in the quarter.

Global M&A volumes have shattered all-time records, with advisors struggling to cope with transaction volumes never seen before.

Deals worth more than $1.5 trillion were signed by the world's biggest investment banks in the September quarter, with Goldman comfortably topping the league tables for worldwide M&A advisory, as per Refinitiv data.

The league tables rank financial services firms on the amount of M&A fees they generate.

Overall financial advisory revenue jumped 225% to $1.65 billion, while underwriting revenue surged 33% to $1.90 billion.

Goldman's investment bank had its second best quarter ever, with revenue of $3.70 billion, driven by strength in advisory and underwriting fees.

The global markets business, which now houses the trading business and accounts for roughly 41% of overall revenue, reported revenue of $5.61 billion, up 23%.

Unlike rivals such as JPMorgan (JPM.N) and Bank of America (BAC.N), Goldman has a relatively smaller consumer business, which has limited its exposure to loan defaults and allowed it to focus on investment banking.

With dealmakers the world over drowning in a flurry of deals, Goldman also cashed in big-time as companies rushed to raise capital, refinanced debt and sold new stock.

Shares of the investment bank were up nearly 2.5% in premarket trading.

Reporting by Noor Zainab Hussain and Anirban Sen in Bengaluru, Elizabeth Dilts and Matt Scuffham in New York; Editing by Arun Koyyur
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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