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Due to the unexpected growth in transaction business and the recovery of investment banking, Goldman Sachs' profits soared by 45% in the third quarter, with both revenue and net interest income exceeding expectations.

On Tuesday before the US stock market opened, Goldman Sachs released its financial report for the third quarter. Specifically:

Net revenue was $12.7 billion, a year-on-year increase of 7%, better than the estimated $11.77 billion;

Profits were $3.987 billion, a year-on-year surge of 45%;

Net interest income was $2.62 billion, also exceeding the estimated $1.84 billion;

Earnings per share were $8.40, compared to $5.47 in the same period last year, a year-on-year surge of 54%, higher than the expected $6.89;

It is worth mentioning that in the third quarter, Goldman Sachs' stock sales and trading business unexpectedly grew significantly, setting the best quarterly performance in more than three years, with traders charging fees on all key business lines exceeding expectations.

After the financial report was released, Goldman Sachs' US stock rose by more than 3% before the market opened, with a year-to-date increase of 34%, leading among US banks, and hit a historical high on Monday.Trading revenue surpasses expectations with a resurgence in investment banking

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Breaking down the business segments, equity sales and trading shine, investment banking exceeds expectations, but fixed income trading declines:

Equity Sales and Trading: Revenues of $3.5 billion, exceeding the estimated $2.95 billion, marking the best quarterly performance since the first quarter of 2021, primarily due to increased intermediary income from derivatives and cash products;

Fixed Income Trading: Revenues decline by 12% to $2.96 billion, attributed to decreased income from interest rates and commodities. In August, the bank announced that co-head of commodities business, Qin Xiao, left the position after only a few months, coinciding with a slowdown in the growth of this business.

Investment Banking: Revenues of $1.86 billion, better than the widely estimated $1.68 billion. Merger advisory income was $875 million. Goldman Sachs leads this metric after lagging behind competitor JPMorgan Chase in the second quarter. Equity underwriting business income was $385 million, and debt underwriting business income was $605 million.

Asset and Wealth Management: Revenues of $375 million, a 12% increase from the same period last year. Management fee income grew by 9%. The bank reported that alternative investment business raised $16 billion, mainly related to credit-related strategies.

Additionally, there was a loss of $415 million due to the termination of the credit card cooperation with General Motors and the abandonment of other small retail businesses. Barclays Bank stated on Monday that it would take over the General Motors business after Goldman Sachs' failed entry into the consumer loan sector. Affected by the exit of the General Motors credit card business, Goldman Sachs' consumer platform business income decreased by 32% to $391 million, with a pre-tax loss reaching $559 million.

Despite Goldman Sachs' clearer business focus, its return on equity has not yet reached its target of around 15%, achieving this goal only once in the past 10 quarters. In the three months ending September, Goldman Sachs' return on equity was approximately 10.4%.