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.
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.