Goldman Sachs (NYSE:GS) thrashing analyst expectation with Q3 results
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Goldman Sachs (NYSE:GS) reported huge third quarter earnings. The investment bank came in with share price at $4.57 thus going way above the $3.21 expectation. Its revenue increased by 26% making it to around $1.46 billion. This brought the net revenue of the firm to about $8.39 billion. This amount was much larger than what analysts predicted it to be: $7.83 billion.
CEO of Goldman Sachs (NYSE:GS), Lloyd Blankfein stated that it is due to the combined forces of the need to improve U.S. economic conditions and the need for a strong franchise globally that increased client activity for the company. He continued to say that conditions as well as sentiments are quickly changing however the transaction backlog of Goldman Sachs (NYSE:GS) come to show you that clients aim to carry out strategic plans in their own way in order for growth.
The company increased its staff by 3% percent during its current quarter. Its management reported that its expense of benefits and compensation accrual amounted to nearly $2.80 billion in Q3 of 2014. This was 18% more than Q3 of 2013. This caused an overall increase in net revenues. It also stated that the ratio of these benefits and compensation to that of net revenues if 40% compared to the 43% for the companies first half in 2014. There was 41% for the company’s prior nine months of 2013.
Shares of the company fell as the investment bank reported that it missed financial measure for the quarter. The shares closed down to more than 2.6% amounting to $172.58 in the trading on Thursday. Goldman Sachs (NYSE:GS) was the topmost firm in underwriting for September IPO where Alibaba (NYSE:BABA), the e-commerce giant in China, made around $21.8 billion. This was much more than the $17.8 billion made by Visa’s (NYSE:V) IPO and $16 billion by Facebook (NASDAQ:FB) in 2012.
In the current quarter, the net revenues of investment banks increased by 26% making it to about $1.46 billion. This showed a 40% increase in revenue from financial advice which was due to the amount of mergers and acquisitions occurring around the globe. Investment banks were gaining high sources of income due to these companies which is why Goldman Sachs (NYSE:GS) prospered too.
The problem arose with the lower amount of net revenues in debt as the bank reported. Goldman Sachs (NYSE:GS) stated that it ranked first globally considering the work it did on M&As this year. CFO of the company, Harvey Schwartz stated with a conference call to Wall Street this Thursday that the bank had a lot to do with the mergers of Tyson Foods and Hillshire Brands as well as the merger of Swiss pharmaceutical giant Roche (OTCMKTS:RHHBY) and InterMune (NASDAQ:ITMN) the biotech firm.
It was expected that trading revenues of Goldman Sachs (NYSE:GS) were to fall and so they did. Currency, commodities and fixed income revenues dropped 2% in since Q2 making it to around $2.17 billion. There is a modest decrease in sales through premarket trading though.