Oct. 15 (Reuters) – Goldman Sachs Group Inc (GS.N) on Friday announced a 66% increase in third-quarter profits that exceeded expectations, as Wall Street’s largest investment bank surfed a record wave of M&A activity and initial public offerings.

The bank posted profits of $ 5.28 billion from $ 3.23 billion a year ago, capping a stellar quarter for Wall Street lenders, which benefited from a rebound in the US economy, soaring stock markets and a global windfall.

Goldman Sachs shares were up 2% by mid-morning.

Global M&A volumes have broken all-time records, with deals worth more than $ 1.5 trillion signed by the world’s largest investment banks in the third quarter, according to data from Refinitiv.

According to data from Refinitiv, Goldman comfortably held its top spot as the world’s leading M&A advisory bank.

These merger and acquisition fees pushed Goldman Sachs’ overall financial advisory revenue up 225% to $ 1.65 billion, while underwriting revenue, which was boosted by a stampede from private companies seeking entry into the market. stock market jumped 33% to $ 1.90 billion.

In total, Goldman’s investment bank posted its second best quarter in its history, with total revenue of $ 3.70 billion, and executives said they expected revenues to remain high. .

“I remain optimistic about the (opportunities),” Goldman Sachs CEO David Solomon said on a call with analysts. “Activity levels remain high, especially in investment banking.

Earnings per share were $ 14.93 from $ 8.98 a year earlier, exceeding the $ 10.18 per share predicted by analysts, according to Refinitiv’s IBES estimate.

Goldman’s global markets trading activity, which accounts for about 41% of global revenue, reported revenue of $ 5.61 billion, up 23%.

The bank has steadily expanded its blue chip brokerage business, where it handles transactions for hedge funds, recovering clients and assets as other banks have downsized their main divisions. In addition, it has gained market share in financing its clients’ equity investments, according to its quarterly report.

A view of the Goldman Sachs stall on the floor of the New York Stock Exchange on July 16, 2013. REUTERS / Brendan McDermid

These gains in blue chip brokerage and equity financing helped Goldman roughly double its equity trading income this quarter to $ 3.1 billion, from 2.1 a year ago. It was higher than rival Morgan Stanley, who reported trading revenues of $ 2.87 billion and is generally number one in this industry.

Morgan Stanley (MS.N) said Thursday its third quarter profit rose 38%, while JPMorgan Chase & Co (JPM.N) reported a 24% increase. read more Citigroup Inc. (CN) and Bank of America Corp (BAC.N), which were also buoyed by transaction fees and stock trading, increased their profits by 48% and 64%, respectively. All the banks easily exceeded the estimates.

“Obviously, a rise was expected given what we had seen from our peers, but not as much of a rise,” Credit Suisse analyst Susan Roth Katzke wrote in a note to investors on Friday. “The pace was wide.”

CONSUMER BUSINESS

Goldman’s consumer business, while small, has been key to its diversification strategy.

As part of CEO David Solomon’s strategy to create alternative revenue streams, Goldman is doubling down on Marcus, his consumer bank.

Since taking over from Lloyd Blankfein in 2018, Solomon has sought to diversify his income, with a greater focus on consumer banking, consumer wealth management and cash management.

Goldman’s consumer banking unit net sales increased 17% to $ 382 million, reflecting higher credit card and deposit balances.

Total loans increased 28% to $ 143 billion in the quarter from a year ago, a solid result in a mixed quarter for loan growth on Wall Street.

JPMorgan said on Wednesday lending was up 5% across the bank from a year ago, while Citi was broadly stable. Read more

Bank of America (BAC.N) and Wells Fargo (WFC.N) reported lower year-over-year loan growth.

Total revenue jumped 26% to $ 13.61 billion in the quarter, far exceeding estimates.

Reporting by Noor Zainab Hussain and Anirban Sen in Bengaluru, Elizabeth Dilts and Matt Scuffham in New York; Editing by Arun Koyyur and Nick Zieminski

Our Standards: Thomson Reuters Trust Principles.

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