Banking and investment giant Goldman Sachs (GS 2.58%)reported third-quarter earnings on Oct. 15, 2024, which highlighted a 53% year-over-year jump in EPS and a 7% increase in total revenue was $12.70 billion, indicating resilience amid volatile markets. The report also pointed out a rise in provisions for credit losses to $397 million, prompting a cautious outlook.
Overall, the quarter portrayed a mixed picture of robust segment growth tempered by rising costs and compliance pressures.
| Metric | Q3 2024 | Q3 2023 | Change (YOY) |
|---|---|---|---|
| EPS | $8.40 | $5.47 | 53.4% |
| Net revenue | $12.7 billion | $11.82 billion | 7.4% |
| Global Banking & Markets revenue | $8.55 billion | $8 billion | 7.0% |
| Platform Solutions revenue | $391 million | $578 million | -32.0% |
| Provision for credit losses | $397 million | $7 million | N/A |
Source: Goldman Sachs. YOY = Year over year.
Understanding Goldman Sachs
Goldman Sachs, a keystone in the financial services industry, operates through three main segments: Global Banking & Markets, Asset & Wealth Management, and Platform Solutions. The Global Banking & Markets segment funds its activities through various streams, including equities and FICC (Fixed Income, Currency, and Commodities). Asset & Wealth Management oversees a diverse range of investments while Platform Solutions provides consumer finance services.
In recent years, Goldman has strategically pivoted to embrace technological advancements, incorporating artificial intelligence (AI) for improved client interaction and investment strategies. Additionally, regulatory compliance remains a key focus area, with the company navigating a complex global regulatory environment to ensure stability and compliance.
Quarterly Performance Analysis
Goldman's Global Banking & Markets segment reported a notable 7% year-over-year rise in revenue, reaching $8.55 billion. The segment capitalized on strong equities results. In contrast, Platform Solutions reported a 32% decline in revenue to $391 million, driven by setbacks in its consumer platforms.
Operationally, Goldman improved its cost efficiency with operating expenses dropping 8% year over year to $8.32 billion. The efficiency ratio, a measure of expense management highlighting operational efficiency, also reflected positive trends. Moreover, strategic capital allocation enabled $1.98 billion to be returned to shareholders through dividends and buybacks, underscoring a commitment to shareholder value.
The firm's total Assets Under Supervision reached a record $3.1 trillion, highlighting effective asset management and continued client engagement. It also faced challenges, particularly in credit loss provisions, which rose to $397 million primarily arising from credit card portfolios.
Look Ahead
Goldman's management did not provide any specific guidance for the fourth quarter in its report. It remains cautious given the evolving market conditions and retains a strategic focus on areas like technological expansion and sustainable finance. This involves increased digitization efforts in services and a green finance push, aligning with modern investment priorities.
Investors are advised to watch Platform Solutions closely for signs of recovery or further decline. The firm plans to leverage its tech platforms to maintain operational gains amid a competitive environment.
