Goldman Sachs nearly doubles profit to $3.5 billion

Goldman Sachs Group Inc. on Wednesday nearly doubled its overall profit to $3.5 billion from $1.8 billion a year ago, or $9.68 per share, up from $4.79 per share in the third quarter of last year and smashing average analyst estimates of $5.57.

The bank also posted its highest quarterly return-on-equity since 2010 at 17.5 percent, which measures how well shareholder money is used to produce profits.

The remarkable performance was attributed largely to a 29 percent jump in trading revenue.

Revenue rose at all four of its business units, with total revenue up 30 percent to $10.8 billion. That was above the $9.5 billion consensus estimate.

Goldman’s $4.6 billion in quarterly trading revenue included gains across fixed income and equity markets, which accounted for 42 percent of Goldman’s overall revenue, while consumer and wealth management represented 14 percent.

Goldman’s investment banking business also benefited from several high-profile IPOs including Snowflake, Rocket Companies, and Dun & Bradstreet during the quarter.

Credit Suisse analyst Susan Roth Katzke described the results as “simply stunning."

Goldman's shares were up 0.6% by late morning while those of other big lenders plummeted.

Oppenheimer analyst Chris Kotowski said Goldman remains one of the favorite stocks due to its small but very high-quality loan portfolio, compared to those of other large bank holding companies.

Kotowski added that Goldman has minimal exposure to small business and credit cards, which are deemed the biggest COVID-19 risks.

Goldman expects the trends to continue through at least the end of the year, as markets remain volatile and its investment banking backlog has grown, Chief Financial Officer Stephen Scherr said on an analyst call.