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Goldman Sachs (GS) is modestly higher after comfortably exceeding expectations in its Q3 report this morning. EPS of $17.01 topped the $12.86 FactSet consensus, while revenue increased 23% yr/yr to $18.68 bln, the second-highest quarterly total in its history. Results highlighted strong performance across equities, investment banking, and asset management despite softer FICC activity and elevated expenses.

• Global Banking & Markets revenue increased 32% yr/yr to $13.46 bln but declined 13% sequentially. Investment banking fees climbed 21% to $3.22 bln, supported by record advisory revenue amid increased completed M&A activity, alongside stronger equity and debt underwriting. However, the investment banking backlog declined sequentially, primarily in advisory, and was slightly below year-end 2025 levels.
• Equities remained the bright spot, surging 72% yr/yr to $6.44 bln, supported by record financing revenue, which nearly doubled. Financing now accounts for over 40% of combined FICC and equities revenue year-to-date. As previously signaled, FICC was softer, roughly flat yr/yr but down 24% sequentially, with weakness in mortgages, credit, and rates.
• Asset & Wealth Management revenue increased 14% yr/yr and 10% sequentially to $5.05 bln. Recurring management and other fees climbed 22% yr/yr and 7% sequentially to a record $3.59 bln, supported by record assets under supervision of $4.10 trillion. Long-term net inflows reached $97 bln, marking the 35th consecutive quarter of positive inflows.
• Operating expenses increased 20% yr/yr to $11.31 bln, reflecting higher transaction-based expenses and compensation tied to strong operating performance. However, the year-to-date efficiency ratio improved to 59.4% from 62.1%, highlighting improved operating leverage. Results also included a $450 mln charitable contribution, reducing EPS by approximately $1.00.
• Solomon acknowledged a challenging macroeconomic backdrop, with renewed geopolitical tensions and disruptions to energy flows pushing oil prices and bond yields higher and renewing inflation concerns. However, he emphasized that the U.S. economy remains resilient, supported by strong corporate earnings and a healthy labor market. Despite the uncertainty, Goldman continues to see opportunities across M&A, capital formation, and financing, including growing demand tied to AI infrastructure investment.

Briefing.com Analyst Insight

Goldman's results underscore its continued efforts to build a more diversified and durable earnings base, with record equities financing and expanding recurring management fees supporting this strategy. This is particularly notable given the sequential weakness in FICC and broader macroeconomic uncertainty. This is particularly notable given the sequential weakness in FICC and broader macroeconomic uncertainty. While the investment banking backlog declined after entering Q3 at a five-year high, partly reflecting strong advisory revenue realization, the smaller pipeline warrants monitoring. Still, Goldman notes that financial sponsors' share of announced M&A remains below historical averages, suggesting room for additional dealmaking activity. Meanwhile, equity financing demand continues to exceed industry capacity, supporting attractive pricing and allowing Goldman to remain selective in deploying capital.