Goldman Sachs profit jumps as bankers cash in on big deals

[NEW YORK] Goldman Sachs’ quarterly profit jumped more than 37 per cent on Tuesday (Oct 14) as its investment bankers earned higher advisory fees and rallying markets boosted revenue from managing client assets.

Its prediction for a banner year for dealmaking has materialised as corporations revive plans for mergers and listings.

Investment banking fees rose to US$2.66 billion in the quarter ended September 30, compared with US$1.87 billion a year ago.

The growth was fuelled by a 60 per cent surge in advisory fees, while debt and equity underwriting fees also gained. Rival JPMorgan Chase also reported robust investment banking numbers earlier in the day.

Shares of the bank fell 1.5 per cent in premarket trading after the results.

Global M&A volumes for the first nine months of the year crossed US$3.43 trillion, with nearly 48 per cent of it in the US, according to data from Dealogic.

The period also saw the highest average M&A volume globally and in the US since 2015, in line with CEO David Solomon’s prediction at last year’s Reuters NEXT conference.

Goldman was among the joint book-running managers on marquee initial public offerings in the quarter, including design software firm Figma, Swedish fintech Klarna, and space tech firm Firefly Aerospace.

Overall quarterly profit stood at US$4.1 billion, or US$12.25 per share, compared with US$2.99 billion, or US$8.40 per share, a year ago.

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Goldman executives have been increasingly optimistic around dealmaking in recent months, with Solomon saying in September it had one of its busiest weeks for IPOs in more than four years.

Revenue from asset and wealth management rose 17 per cent to US$4.4 billion, marking the first quarterly jump this year for the segment. This reflected record high management fees, as well as private banking and lending revenue.

The business is a key priority for Goldman as it seeks steadier revenue from fees, which offset the volatility in its advisory and trading businesses.

Goldman announced last month it will take a stake worth as much as US$1 billion in T Rowe Price, as part of a partnership to tap the asset manager’s retirement money for alternative assets.

Assets under supervision climbed to US$3.45 trillion, boosting management fees by 12 per cent.

Goldman set aside US$339 million as provisions for credit losses, compared with US$397 million a year ago. The provisions were mainly related to its credit card portfolio.

Its shares have climbed more than 37.4 per cent this year as of last closing price, making them the best performer among big US banks.

Wall Street trading desks have reaped rewards from record volatility as clients rejig portfolios to keep pace with changes in President Donald Trump’s trade, foreign and fiscal policies.

The third quarter, however, remained one of Wall Street’s calmest quarters in nearly six years as an interest-rate cut from the Federal Reserve and robust AI investment pushed major US stock indexes to record highs.

Still, Goldman’s equities trading revenue rose 7 per cent to US$3.74 billion as investors took on more risk. Fixed income, currency and commodities hauled in US$3.47 billion, 17 per cent higher than a year ago. REUTERS