Goldman Sachs profit jumps 45% as dealmaking activity rebounds

GOLDMAN Sachs’ profit has jumped 45 per cent in the third quarter, as the investment bank benefited from a rebound in dealmaking.

It joined JPMorgan Chase, which also gained from an investment banking revival. This comes as corporate clients become 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,” chief executive officer David Solomon said. Goldman Sachs’ shares rose 1.5 per cent before the market opened.

Goldman’s investment banking fees jumped 20 per cent to about US$1.9 billion. Leveraged finance, which refers to loans made to risky ventures such as funding buyouts, and investment-grade activity powered a jump in debt underwriting.

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

The bank, however, booked US$397 million in provisions for credit losses, higher than the US$7 million a year ago. This was driven by higher charge-offs in its credit card portfolio.

Goldman Sachs continues to hurt from its ill-fated consumer business two years after stepping back from it. The company has since shifted its focus back to traditional mainstays of investment banking and trading.

Total profit increased to US$2.99 billion, or US$8.40 per share, for the three months ended Sep 30, from US$2.06 billion, or US$5.47 per share, in the year-ago period.

Goldman Sachs also benefited from easier comparisons with the year earlier, when it took sizeable write-downs on the consumer business and real estate investments.

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

JPMorgan is in talks to replace Goldman Sachs as tech behemoth Apple’s credit card partner. REUTERS