Goldman Sachs traders deliver surprise surge in firm's best year ever

Goldman Sachs Group Inc. posted a surprise jump in its trading business, rounding out a stellar quarter for Wall Street’s biggest banks. 

The firm’s trading operation posted a 23% increase in revenue, defying analysts’ expectations that the business would struggle to keep up with last year’s pace and slide 9%. Results from fixed-income trading easily surpassed estimates.

“This quarter’s results demonstrated the diversity of contribution from across all four segments,” Chief Financial Officer Stephen Scherr said. “And it just shows the strength embedded within the business.”

The Covid-19 pandemic has given a massive boost to banks’ trading and dealmaking operations. As economies recover and grow again, those businesses continue to deliver for U.S. finance giants. Goldman has already posted enough revenue through September -- $46.7 billion -- to give the firm its best year ever.

Last month, New York-based Goldman announced Scherr will leave the firm and hand over the reins to Denis Coleman III, who previously helped lead the financing group at the bank. Beth Hammack, who was the treasurer, will take over Coleman’s old role.

“It’s enormously gratifying to be leaving the firm at a point when it’s performing at an exceptional level,” Scherr said.

Investment-banking gains were bolstered by outperformance in advisory, which brought in $1.65 billion. Trading-division revenue came in at $5.61 billion, according to a statement Friday, surging past even last year’s heated pace.

Goldman shares advanced 2% to $399.02 at 9:45 a.m. in New York, and have surged 51% this year.

The bank’s asset-management business, which also includes its growing alternatives-investing platform, notched revenue of $2.28 billion, down 56% from a year earlier. Last month, Goldman listed its Petershill Partners unit in London, offering investors the ability to buy into its business that snaps up ownership stakes in various investment firms.

Goldman’s consumer and wealth-management business pulled in $2.02 billion, up 16% from a year earlier. The company last month inked a deal to buy GreenSky Inc. for about $2.24 billion to expand its consumer division. GreenSky offers payment plans to customers with home-improvement projects or health-care needs.

Also in Goldman’s results:

1. Equity-trading revenue rose to 20% to $3.1 billion.
2. Debt-underwriting revenue rose 27% to $726 million, while the firm pulled in $1.17 billion from equity underwriting, up 27% from a year earlier.
3. Companywide revenue climbed 26% to $13.6 billion, compared with an average estimate of $11.6 billion.
4. Net income came in at $14.93 a share. The company was expected to earn $9.92 a share, according to analysts in a Bloomberg survey.