Goldman Sachs reported third-quarter profits and revenues that exceeded analysts’ expectations due to robust trading revenue. While the bank’s shares fell over 1% and are down about 10% for the year, the results were better than anticipated. Goldman Sachs saw its profit drop 33% to $2.058 billion, with earnings per share at $5.47. Although the revenue slipped by 1% to $11.82 billion, it surpassed expectations by roughly $600 million. The bank’s bond trading revenue was $3.38 billion, a 6% decline from the previous year, but it was nearly $600 million more than analysts had predicted. This was attributed to the strength in interest-rate products and mortgages, which offset trading declines in currencies, commodities, and credit. Additionally, Goldman Sachs benefited from its efforts to boost lending activities in the trading division, leading to record fixed-income financing revenue of $730 million. Equities trading revenue climbed by 8% from a year earlier to $2.96 billion, primarily due to higher activity in derivatives, exceeding estimates by approximately $200 million.

Investment banking revenue slightly increased by 1% to $1.55 billion, slightly exceeding the $1.48 billion estimate. While Goldman Sachs has made efforts under CEO David Solomon to diversify its revenue streams, focusing on asset and wealth management, trading and advisory still account for two-thirds of its revenue. This reliance on trading and investment banking has been a challenge in 2023, as a strong push by the Federal Reserve to raise interest rates to curb inflation led to subdued mergers, initial public offerings, and debt issuance. Despite these hurdles, Goldman Sachs has seen increased activity, and analysts will be keen to learn about the bank’s deal pipeline.