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HomeStock MarketGoldman's profit beats estimates as dealmaking rebound boosts investment banking

Goldman’s profit beats estimates as dealmaking rebound boosts investment banking

By Saeed Azhar and Ateev Bhandari

NEW YORK (Reuters) -Goldman Sachs beat Wall Street expectations for third-quarter profit on Tuesday, as its investment bankers earned higher advisory fees and rallying markets boosted revenue from managing client assets.

The bank’s prediction for a banner year for dealmaking has materialized as corporations revive plans for mergers and listings.

Goldman’s investment banking fees surged 42% to $2.66 billion in the quarter ended September 30 from a year ago. Analysts were expecting a 14.3% increase, according to the average estimate compiled by LSEG.

A Goldman executive said the firm advised on $1 trillion in announced mergers and acquisitions year to date, $220 billion more than its next closest competitor.

It advised Electronic Arts on its $55 billion sale to a consortium of private equity firms and Saudi Arabia’s Public Investment Fund this year, and also advised Holcim on the spinoff of its North American business Amrize, now valued at $26 billion.

Goldman also advised Fifth Third Bancorp, which this month agreed to buy regional lender Comerica in a $10.9 billion deal to create the ninth-largest U.S. bank.

The growth was fueled by a 60% surge in advisory fees, while debt and equity underwriting fees also increased. Rival JPMorgan Chase also reported robust investment banking numbers.

Goldman shares fell 4.7% in early trading as analysts said the trading business underperformed market expectations even though financing for that segment was strong. The shares have surged 37% year-to-date as of Monday, reflecting the dealmaking rebound.

“This quarter’s results reflect the strength of our client franchise and focus on executing our strategic priorities in an improved market environment,” CEO David Solomon said in a statement.

“We know that conditions can change quickly and so we remain focused on strong risk management,” he said, echoing cautious optimism from JPMorgan CEO Jamie Dimon.

LIMITED STAFF REDUCTION, ROLLS OUT AI

Goldman separately informed employees of potential job cuts and hiring slowdown through the end of the year, according to an internal memo seen by Reuters, as the Wall Street giant aims to use artificial intelligence to enhance productivity.

It called the initiative “OneGS 3.0.”

“The rapidly accelerating advancements in AI can unlock significant productivity gains for us, and we are confident we can re-invest those gains to continue delivering world-class solutions for our clients,” the memo, signed by CEO Solomon, President John Waldron and CFO Denis Coleman.


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