Goldman Sachs (GS) Takes Breather Despite Blow-Out Q3 Numbers
The investment banking giant reported net revenues of $8.35 billion, up 49 percent from last year and above the consensus of $7.3 billion. Results were 3% lower than the second quarter of 2012. Net revenues in Investment Banking were $1.16 billion, 49% higher than the third quarter of 2011 and 3% lower than the second quarter of 2012. Net revenues in Institutional Client Services were $4.18 billion, 3% higher than the third quarter of 2011 and 8% higher than the second quarter of 2012. Net revenues in Fixed Income, Currency and Commodities Client Execution (FICC) were $2.22 billion, 28% higher than the third quarter of 2011. Net revenues in Equities were $1.96 billion, 16% lower than the third quarter of 2011. Net revenues in Investing & Lending were $1.80 billion for the third quarter of 2012. Net revenues in Investment Management were $1.20 billion, 2% lower than the third quarter of 2011 and 10% lower than the second quarter of 2012.
Diluted earnings per common share were $2.85 compared with a diluted loss per common share of $0.84 last year and the consensus of $2.12.
Book value per common share and tangible book value per common share both increased approximately 3% during the quarter to $140.58 and $129.69, respectively.
Operating expenses were $6.05 billion, 40% higher than the third quarter of 2011 and 16% higher than the second quarter of 2012.
The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) for the third quarter of 2012 was $3.68 billion, which was higher than the third quarter of 2011, due to higher net revenues. The ratio of compensation and benefits to net revenues for the first nine months of 2012 was 44.0%, consistent with the first nine months of 2011.
Goldman Sachs is ranked first in worldwide announced and completed mergers and acquisitions for the year-to-date and first in worldwide equity and equity-related offerings and common stock offerings for the year-to-date.
"This quarter's performance was generally solid in the context of a still challenging economic environment," said Lloyd C. Blankfein, Chairman and Chief Executive Officer. "We continue to be disciplined in managing our operations and capital, while effectively serving our clients’ needs. The focus on these priorities will serve our shareholders and the firm well over the longer term."
Goldman Sachs's Board of Directors increased the firm's quarterly dividend to $0.50 per common share from $0.46 per common share.
Shares of Goldman Sachs last traded at $123.70, down 0.64 percent from the close. However, share are up nearly 40 percent since July.