Continuing the positive note, The Goldman Sachs Group, Inc. (GS – Analyst Report) reported another impressive quarter. Driven by strong top-line performance, the company’s third-quarter 2014 earnings per share came in at $4.57, significantly outpacing the Zacks Consensus Estimate of $3.22. Moreover, results were above the year-ago figure of $2.88.
Shares of Goldman decreased more than 3% in the pre-market session, indicating that investors have been bearish on the results. The price reaction during the full trading session will give a fair idea about the extent of disappointment among investors.
Higher investment banking and fixed income revenues along with strong capital deployment activities were the positives for the quarter. However, increased expenses were a concern. Moreover, lower trading revenues reflected market volatility.
Net income applicable to common shareholders in the quarter was $2.14 billion, increasing 50% from $1.43 billion recorded in the prior-year quarter.
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Performance in Detail
Goldman’s net revenue climbed 25% year over year to $8.4 billion in the quarter under review. Results were mainly driven by elevated revenues in all segments. Moreover, revenues outpaced the Zacks Consensus Estimate of $7.8 billion.
Quarterly revenues, as per business segments, are as follows:
Investment Banking division generated revenues of $1.5 billion, up 26% year over year. Results reflected higher-than-expected financial advisory revenues, driven by increased mergers and acquisitions (M&A) activities during the quarter. Moreover, revenues from the underwriting business (up 17% year over year) were on the upswing, driven by elevated revenues in equity underwriting, partially offset by reduced debt underwriting.
Investment Management division generated revenues of $1.5 billion, up 20% year over year. Results reflected increased management and other fees along with higher incentive fees and transaction revenues.
Investing and Lending division booked revenues of $1.7 billion in the quarter, up 15% year over year. Results included net gains of $876 million from investments in equities, net interest income and net gains of $606 million from debt securities and loans coupled with other net revenues of $210 million.
Institutional Client Services division recorded revenues of $3.8 billion, up 32% year over year. Results were driven by significantly higher revenues in Fixed Income, Currency and Commodities Client Execution (FICC), marked by increased net revenues primarily in currencies followed by commodities, interest rate products and mortgages.
