Profit at Goldman Jumps Rise of 84% Fueled By Stock and Bond Trades
Posted on: Thursday, 22 September 2005, 12:00 CDT
Goldman Sachs Group has reported an 84 percent gain in third- quarter earnings, driven by significant gains in stock and bond trading as well a surge in revenue for services offered to hedge funds.
"Everything went the right way," David Viniar, chief financial officer of Goldman Sachs, said on Tuesday. "It was a strong quarter across the board."
The firm earned a record $1.6 billion, or $3.25 a share, compared with $879 million, or $1.74 a share, in the quarter a year earlier. Analysts surveyed by Thomson Financial had expected Goldman to earn $2.38 a share. Revenue soared 61 percent, to $7.3 billion
Revenue in the fixed-income, currency and commodities divisions surged 41 percent, to $2.6 billion. Equity revenue increased 75 percent, to $1.6 billion, fueled by stock trading rather than commissions. Equity trading revenue shot up 189 percent, to $872 million, as Goldman took more risk.
"What it really says is the future of institutional equities will be more like fixed income a business of proprietary trading and customer execution with customers evolving away from being a client and acting more like a counterparty," said Brad Hintz, a securities industry analyst with Sanford C. Bernstein. "This idea of a fixed- income model for equity taking risk seems to be working."
Total revenue for trading and principal investments soared 88 percent, to $5.1 billion
Investment banking revenue, representing only 14 percent of the firm's overall revenue mix, increased 14 percent, to $1 billion. Advice on transactions, a treasured category for Goldman Sachs, showed a 24 percent gain, to $559 million. Stock underwriting revenue fell 9 percent, to $199 million
Investment banking revenue currently is the smallest of the bank's three primary sources of income. Trading activities dominate revenue generation, with trading and principal investments accounting for almost 70 percent of the mix; asset management and securities services bring in 17 percent; and investment banking, 14 percent.
Viniar said the firm was comfortable with that balance because a significant portion of Goldman's revenue still was generated by investment banking.
Overall asset management revenue increased 28 percent, to $1.2 billion.
Goldman completed a buyback of 40 million shares and announced on Tuesday that it would buy back a further 60 million shares. The firm has 11 million fewer shares outstanding than a year ago. Goldman's return on equity, a measure frequently used to gauge a bank's profitability, was 25 percent for the quarter, beating both Lehman Brothers, which reported 23 percent, and Bear Stearns, at 16.9 percent.
Source: International Herald Tribune
Related Articles
- Organic Style Achieves 34 Percent Revenue Growth in Third Quarter of 2009
- WD(R) Announces Record Quarterly Revenue of $2.2 Billion With Net Income of $288 Million, or $1.25 Per Share
- S. Korea reports $6 billion trade surplus
- New Solution From Misys Enables Banks and Investment Managers to Deploy Cross-Asset Trading Capabilities in Less Than 4 Months
- DuPont India Moves Into Photovoltaic Market and Targets Revenue of $1 Billion By 2012, an Industrial Info News Alert
- GE Commercial Finance and NBC Universal Announce $250 Million Equity Fund to Invest in Media and Technology Companies With High Growth Potential
- UTC Reports First Quarter EPS Increase of 19 Percent on 13 Percent Revenue Growth; Increases 2006 EPS Outlook
- Webmetrics Achieves 105 Percent Revenue Growth in 2005
- Intel Posts Record Second-Quarter Revenue of $9.2 Billion; Earnings Per Share 33 Cents
- Verizon to Acquire MCI for $5.3 Billion in Equity and Cash
 |
 |
User Comments (0)
RSS Feeds