Goldman Sachs to Report Third-Quarter Earnings as Deal-Making Prospects Shine
Goldman Sachs Group Inc., the renowned Wall Street giant, is gearing up to release its third-quarter earnings report. The company’s deal-making prospects are expected to be in the spotlight as industry analysts eagerly await the results.
Scheduled to report before the opening bell on Tuesday, Goldman Sachs is anticipated to post earnings of $5.31 per share, according to LSEG, the entity formerly known as Refinitiv. Revenue is estimated to reach $11.19 billion, with trading revenue projected at $2.8 billion for fixed income and $2.73 billion for equities, as per StreetAccount. Furthermore, the investment banking revenue is anticipated to hit $1.48 billion.
Goldman Sachs stands out among its major banking peers due to its heavy reliance on investment banking and trading revenue. While CEO David Solomon has made efforts to diversify the company’s revenue stream, such as expanding into retail banking and emphasizing growth in asset and wealth management, Wall Street remains the driving force behind the firm’s profitability. In the previous quarter, trading and advisory activities accounted for two-thirds of Goldman Sachs’ revenue.
However, the decline in mergers, initial public offerings, and debt issuance this year, resulting from the Federal Reserve’s decision to raise interest rates and slow down the economy, has posed a challenge for the company. With recent signs of increased activity, analysts are keen to learn about Goldman’s pipeline of deals during this earnings call.
Goldman Sachs has faced obstacles in two key areas. Firstly, the firm’s strategic retrenchment from retail banking has led to losses as it seeks buyers for unwanted operations. Secondly, its exposure to commercial real estate has prompted write-downs. Last week, the company announced that its sale of lending business GreenSky would impact third-quarter results negatively by 19 cents per share.
Analysts will also be eager to hear David Solomon’s perspective on the investment banking outlook, as well as the role of its remaining consumer efforts, particularly the Apple Card business, in the latest iteration of Goldman Sachs.
Despite these challenges, Goldman Sachs’ stock has showcased relative resilience, declining by 8.4% this year compared to the 21% drop of the KBW Bank Index.
Last week, other major banks, including JPMorgan, Wells Fargo, and Citigroup, all exceeded expectations for third-quarter profit, boosted by lower-than-anticipated credit costs. Morgan Stanley is set to announce its results on Wednesday.
This story is developing, and updates will be provided.