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Goldman (GS) Q3 Earnings Beat Estimates, Revenues Fall Y/Y
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The Goldman Sachs Group, Inc.’s (GS - Free Report) third-quarter 2023 earnings per share of $5.47 surpassed the Zacks Consensus Estimate of $5.32. Also, the bottom line fell 34% from the year-earlier quarter.
Shares tanked marginally in the pre-market trading on an earnings beat. Investors seem to be bullish on the stock because of higher revenues in the Global Banking and Markets segment.
Goldman’s results have been supported by strong Fixed Income, Currency and Commodities Client Execution (FICC) financing revenues, as well as strength in the consumer banking business.
Net earnings of $2.05 billion plunged 33% from the prior-year quarter. Our estimate for the metric was $1.80 billion.
Revenues Decline, Expenses Rise
Net revenues of $11.82 billion fell 1% from the year-ago quarter. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $11 billion.
Total operating expenses increased 18% year over year to $9.05 billion. Our estimate for the metric was $7.99 billion. Higher depreciation and amortization led to the increase.
Provision for credit losses was $7 million lower than $515 million in the prior-year quarter.
Quarterly Segmental Performance Mixed
The Asset & Wealth Management division generated revenues of $3.23 billion in the reported quarter, down 20% year over year. Our estimate for the metric was $3.57 billion. Results reflect higher fees from private banking and lending, offset by the net loss in equity investments and a decline in incentive fees.
Firmwide assets under supervision were a record $2.68 trillion, down from $2.71 trillion in the prior quarter.
The Global Banking & Markets division recorded revenues of $8 billion, up 6% year over year. Our estimate for the metric was $7.02 billion. The fall indicated strength in the investment banking (IB) business (up 1%) and higher equities revenues (up 8%), partially offset by lower net revenues in FICC (down 6%).
The Platform Solutions division’s revenues were $578 million, rising 53% year over year. Our estimate for the metric was $504.4 million. The jump was driven by significantly higher revenues from consumer platforms.
Capital Ratios Mixed
As of Sep 30, 2023, the standardized Common Equity Tier 1 capital ratio was 14.8%, up from the prior quarter’s 14.9%. The company’s supplementary leverage ratio was 5.6%, unchanged from the prior quarter.
Capital Deployment Update
In the quarter under review, Goldman returned $2.44 billion of capital to common shareholders. This included $1.50 million in share repurchases and common stock dividends of $937 million.
Conclusion
While Goldman’s well-diversified business will ensure earnings stability going forward, macroeconomic uncertainty and recessionary fears will likely weigh on its financial performance. Strength in the consumer banking business is a tailwind. Active client engagement and a solid position in announced and completed mergers and acquisitions globally are likely to act as tailwinds.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2023 adjusted earnings per share of $1.39 has outpaced the Zacks Consensus Estimate of $1.25. The figure improved 6.9% year over year. The adjusted figure excludes the impacts of discrete tax benefits related to the resolution of the prior year period’s tax matters.
WFC’s results benefited from higher net interest income (NII) and non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, Citigroup witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.
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Goldman (GS) Q3 Earnings Beat Estimates, Revenues Fall Y/Y
The Goldman Sachs Group, Inc.’s (GS - Free Report) third-quarter 2023 earnings per share of $5.47 surpassed the Zacks Consensus Estimate of $5.32. Also, the bottom line fell 34% from the year-earlier quarter.
Shares tanked marginally in the pre-market trading on an earnings beat. Investors seem to be bullish on the stock because of higher revenues in the Global Banking and Markets segment.
Goldman’s results have been supported by strong Fixed Income, Currency and Commodities Client Execution (FICC) financing revenues, as well as strength in the consumer banking business.
Net earnings of $2.05 billion plunged 33% from the prior-year quarter. Our estimate for the metric was $1.80 billion.
Revenues Decline, Expenses Rise
Net revenues of $11.82 billion fell 1% from the year-ago quarter. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $11 billion.
Total operating expenses increased 18% year over year to $9.05 billion. Our estimate for the metric was $7.99 billion. Higher depreciation and amortization led to the increase.
Provision for credit losses was $7 million lower than $515 million in the prior-year quarter.
Quarterly Segmental Performance Mixed
The Asset & Wealth Management division generated revenues of $3.23 billion in the reported quarter, down 20% year over year. Our estimate for the metric was $3.57 billion. Results reflect higher fees from private banking and lending, offset by the net loss in equity investments and a decline in incentive fees.
Firmwide assets under supervision were a record $2.68 trillion, down from $2.71 trillion in the prior quarter.
The Global Banking & Markets division recorded revenues of $8 billion, up 6% year over year. Our estimate for the metric was $7.02 billion. The fall indicated strength in the investment banking (IB) business (up 1%) and higher equities revenues (up 8%), partially offset by lower net revenues in FICC (down 6%).
The Platform Solutions division’s revenues were $578 million, rising 53% year over year. Our estimate for the metric was $504.4 million. The jump was driven by significantly higher revenues from consumer platforms.
Capital Ratios Mixed
As of Sep 30, 2023, the standardized Common Equity Tier 1 capital ratio was 14.8%, up from the prior quarter’s 14.9%. The company’s supplementary leverage ratio was 5.6%, unchanged from the prior quarter.
Capital Deployment Update
In the quarter under review, Goldman returned $2.44 billion of capital to common shareholders. This included $1.50 million in share repurchases and common stock dividends of $937 million.
Conclusion
While Goldman’s well-diversified business will ensure earnings stability going forward, macroeconomic uncertainty and recessionary fears will likely weigh on its financial performance. Strength in the consumer banking business is a tailwind. Active client engagement and a solid position in announced and completed mergers and acquisitions globally are likely to act as tailwinds.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
The Goldman Sachs Group, Inc. price-consensus-eps-surprise-chart | The Goldman Sachs Group, Inc. Quote
Currently, Goldman has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Big Banks
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2023 adjusted earnings per share of $1.39 has outpaced the Zacks Consensus Estimate of $1.25. The figure improved 6.9% year over year. The adjusted figure excludes the impacts of discrete tax benefits related to the resolution of the prior year period’s tax matters.
WFC’s results benefited from higher net interest income (NII) and non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, Citigroup witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.