Goldman Sachs reports 45% earnings growth in Q3 2024
US investment bank Goldman Sachs, one of the world's largest financial institutions, has posted very strong results for the third quarter of 2024, with profits up 45% compared to the same period last year, pointing to a recovery in mergers and acquisitions as well as growth in stock market trading. These results suggest that two years of dealmaking stagnation is over and Goldman Sachs is back on track.
Goldman Sachs $GS reported strong earnings growth in the third quarter of 2024, up 45% compared to the same period last year.
The bank's net income rose to nearly $3 billion, up from the $2 billion achieved in the third quarter of 2023. Investment banking revenue increased 20% to $1.8 billion, driven by more bonds and equities issued.
The recovery in M&A also contributed to an increase in advisory fees, which rose only slightly but still point to a positive trend. This puts Goldman Sachs back in a position to be a strong player on Wall Street, with its stock up more than 3% in the pre-market, for a total gain of 28% since the start of 2024, outperforming the other big banks.
Goldman Sachs' results suggest that the long two-year stagnation in M&A is coming to an end. This trend could continue with an expected decline in interest rates, which could support a rebound in business activity in the coming months.
Other competitors are also seeing an increase in investment banking revenues. Wells Fargo (WFC) reported a 37% increase, JPMorgan (JPM) reported a 31% increase, while Bank of America (BAC) reported an 18% increase.
Goldman Sachs' various business areas also fared well. Trading revenue was up 2%, with equity traders being the main driver. Asset and wealth management revenues were up 16%.
Although Goldman Sachs reported a $415 million profit reduction in consumer finance, primarily due to the end of its credit card partnership with General Motors (GM), the bank continues to restructure. The move is part of the bank's broader plan to focus more on its core areas such as trading, asset management and mergers and acquisitions.
The bank is also ending its collaboration with Apple (AAPL) on credit cardswhich is the next step in its plan to focus on more profitable and strategic areas. The move underlines the ongoing restructuring and transition to a stronger and more stable business model.
Goldman Sachs CEO, David Solomon, expressed satisfaction with the results, stating: "Our performance demonstrates the strength of our global business in an improving economic environment."
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Source: Yahoo, CNBC, CNN.