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Goldman Sachs profit jumps 45% on investment banking strength
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Goldman Sachs profit jumps 45% on investment banking strength
Oct 17, 2024 12:39 PM

(Reuters) - Goldman Sachs' third-quarter profit jumped 45%, fueled by a rebound in bond sales, stock offerings and mergers, sending its shares up more than 3% in premarket trading.

It joined JPMorgan Chase, which also gained from an investment banking revival, as corporate clients became more confident in the economic outlook, spurring debt and equity offerings.

"Our performance demonstrates the strength of our world-class franchise in an improving operating environment," CEO David Solomon said in a statement on Tuesday.

Robust U.S. jobs and wage growth have underscored the resilience of the economy, while an interest-rate cut by the Federal Reserve have also encouraged companies to pursue deals.

Investment banking fees jumped 20% to $1.87 billion. Leveraged finance, which refers to loans made to risky ventures like funding buyouts, and investment-grade activity powered a jump in debt underwriting.

Equity underwriting also fetched higher revenue, thanks to a slew of secondary share sales. Revenue from fixed income, currency and commodities trading fell 12%, while equities trading jumped 18%.

The bank also benefited from easier comparisons with the year earlier, when it took sizeable writedowns on the consumer business and real estate investments.

PROVISIONS WEIGH

Goldman, however, booked $397 million in provisions for credit losses compared with $7 million a year ago, driven by higher charge-offs in its credit card portfolio.

The investment bank continues to take a hit from its ill-fated consumer business two years after stepping back from it. Goldman has since shifted its focus back on traditional mainstays of investment banking and trading.

The bank is exiting its credit card venture with automaker General Motors, which has signed a deal with Barclays.

Goldman took a one-time hit of $415 million that included a writedown related to the transfer of the GM credit card business to Barclays.

Its card partnership with Apple is also facing an uncertain future, with JPMorgan in talks to replace Goldman as the tech behemoth's credit-card partner.

Total profit was $2.99 billion, or $8.40 per share, for the three months ended Sept. 30, compared with $2.06 billion, or $5.47 per share, a year ago.

Asset and wealth management - the unit that caters to institutions and high net-worth individuals - fetched 16% higher revenue than a year ago.

The bank supervised a record $3.1 trillion of assets in the third quarter. Its headcount was 46,400, compared with 44,300 as of June end and 45,900 a year earlier.

(Reporting by Saeed Azhar in New York and Niket Nishant in Bengaluru; Editing by Lananh Nguyen and Arun Koyyur)

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