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Goldman Sachs wallops profit estimates on stronger-than-expected bond trading

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Goldman Sachs on Wednesday posted third-quarter results that crushed analysts’ profit estimates on stronger-than-expected results in bond trading and asset management.

The firm generated $3.62 billion in profit, or a record $9.68 a share, exceeding the $5.57 per share estimate of analysts surveyed by Refinitiv. Companywide revenue climbed 30% to $10.78 billion, topping the estimate by more than $1 billion, driven by the trading and asset management divisions.

Shares of the bank gained 0.6% after rising 2.2% earlier in premarket trading.

“Our ability to serve clients who are navigating a very uncertain environment drove strong performance across the franchise, building off a strong first half of the year,” CEO David Solomon said in the release.

The trading division generated $4.55 billion in revenue, a 29% increase from a year earlier. That gain was fueled by bond trading results of $2.5 billion, nearly half a billion dollars more than analysts surveyed by FactSet expected. Equities trading revenue of $2.05 billion essentially matched expectations.

The asset management division produced $2.77 billion in revenue, a 71% gain from a year earlier and nearly $900 million more than the $1.91 billion FactSet estimate.

Goldman said the result was driven by “significantly higher” revenues from equity investments and lending and debt investments. The bank holds a portfolio of public and private company stock in this division, and higher market levels in public shares drove the beat there, the firm said.

Solomon just marked his second year atop Goldman Sachs, but he’s still putting his imprint on the firm. Last month, he restructured several of his businesses and named new heads for the New York-based bank’s asset management and consumer and wealth management divisions.

The 151-year-old investment bank is in the midst of a transformation, launching a slew of digital banking products in hopes of disrupting its established retail banking competitors.

It’s also pushing to get more revenue from wealth management, like rival Morgan Stanley, but hasn’t announced megadeals like the two major acquisitions Morgan Stanley disclosed this year.

Goldman shares have fallen 8.3% this year through Tuesday, a smaller decline than most big banks and the 31% drop of the KBW Bank Index.

In other bank earnings, Bank of America said Wednesday it generated $20.45 billion in total revenue, missing the $20.8 billion estimate of analysts surveyed by Refinitv. Wells Fargo reported disappointing earnings for the third quarter as low rates put pressure on the bank’s net interest income.

On Tuesday, rivals JPMorgan Chase and Citigroup posted results that beat analysts’ expectations as both banks set aside less money for defaulting loans.

Here’s how the company did:

Earnings: $9.68 per share, vs. $5.57 expected by Refinitiv’s consensus estimate.

Revenue: $10.78 billion, vs. $9.46 billion estimate.

Trading Revenue: Fixed Income of $2.5 billion vs $2.03 billion FactSet estimate, Equities of $2.05 billion vs $2.02 billion estimate.

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