updated 9/20/2005 10:54:23 AM ET 2005-09-20T14:54:23

Profits at Wall Street brokerage house Goldman Sachs Group Inc. climbed 83 percent in the third quarter on very strong fixed income trading and a surge in fees from the company’s merger-and-acquisition business.

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For the quarter ended Aug. 26, Goldman Sachs reported Tuesday a profit applicable to common shareholders of $1.61 billion, or $3.25 per share, up from $879 million, or $1.74 per share in the third quarter of 2004.

Net revenues rose 61 percent to $7.29 billion, up from $4.53 billion in the year-ago quarter.

Analysts surveyed by Thomson Financial had forecast earnings of $2.38 per share on revenues of $5.77 billion.

“During the third quarter, we saw increasing activity levels across all of our major businesses and believe overall market conditions support a generally optimistic outlook,” said Henry Paulson Jr., Goldman’s chairman and chief executive.

Fixed income, currencies and commodities trading accounted for more than a third of Goldman’s total revenues, climbing 41 percent from a year ago to $2.63 billion. Equity trading and commission revenues jumped 75 percent to $1.59 billion.

Goldman boasted the top ranking in announced merger-and-acquisition deals, which generated $559 million in fees, up 24 percent from the third quarter of 2004. Equity underwriting revenues dropped 9 percent to $199 million, but revenue from underwriting bond offerings rose 16 percent to $267 million.

The firm’s asset management business generated $1.21 billion in revenue, up 61 percent from a year ago. Goldman’s assets under management at the end of the quarter were a record $520 billion, and the company saw net asset inflows of $18 billion for the quarter.

The higher revenues resulted in higher compensation expenses as brokers and bankers earned more commissions. Compensation expenses rose 61 percent from the year-ago quarter to $3.64 billion. Non-compensation expenses climbed 28 percent to $1.24 billion due to higher brokerage and exchange fees as Goldman’s trading volume increased.

Goldman’s board of directors declared a 25-cent dividend to be paid on Nov. 21 to shareholders of record as of Oct. 24. The board also authorized the repurchase of 60 million additional shares of Goldman stock.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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