Goldman Sachs beats Wall Street forecasts as investment-banking fees surge 20%

• Goldman Sachs reported third-quarter earnings on Tuesday that beat analysts' forecasts.
• The investment bank posted $12.7 billion in revenue and almost $3 billion in net earnings.
• Goldman's investment-banking fees soared 20% year on year to about $1.9 billion.

Goldman Sachs reported third-quarter earnings on Tuesday that beat Wall Street's expectations.

The investment bank generated $12.7 billion in net revenue, a 7% increase from the same period last year. It also cut its operating expenses by 8%, fueling a 45% surge in net income to $2.99 billion.

Earnings per share were $8.40, exceeding AlphaSense's consensus estimate of $6.71.

Net revenues rose 7% year over year in the global banking and market division, fueled by a 20% jump in investment-banking fees to $1.9 billion. The fee bonanza reflected a sharp increase in net revenues from debt underwriting amid strong leveraged finance and investment-grade activity, as well as higher net revenues in equity underwriting driven by secondary offerings.

The unit also benefited from an 18% rise in net revenues from its equities business, which helped offset a 12% drop in net revenues from the fixed income, currency, and commodities business.

Goldman's asset- and wealth-management segment saw a 16% rise in net revenues as it collected record quarterly management and other fees. Moreover, assets under supervision grew by $169 billion last quarter to a record $3.1 trillion.

CEO David Solomon said in the earnings release: "Our performance demonstrates the strength of our world-class franchise in an improving operating environment. We continue to lean into our strengths — exceptional talent, execution capabilities and risk management expertise — allowing us to effectively serve our clients against a complex backdrop and deliver for shareholders."

He had struck a cautious tone at a Barclays conference in September, per a transcript provided by AlphaSense, saying that Goldman's trading unit was trending 10% lower than a year earlier, largely due to fixed-income weakness.

Solomon had also warned of a roughly $400 million blow to pretax earnings from the bank shifting away from its credit-card partnership with General Motors and selling its seller-financing loans.

Goldman stock was 0.3% higher in late-morning trading Tuesday and has gained about 30% this year.

'Solid' results for BofA

Meanwhile, Bank of America's third-quarter earnings showed Tuesday its revenues were almost flat year on year at $25.3 billion. Higher noninterest expenses pushed its net income down 12% to $6.9 billion.

CEO Brian Moynihan said it was another good quarter with "solid earnings results, delivering higher average loans and our fifth consecutive quarter of sequential average deposit growth."

Bank of America stock was up 1.8% Tuesday, bringing the year-to-date increase to almost 26%.

Citi gains traction

Citigroup was the other big bank to report on Tuesday. Its net income for the third quarter dipped $300 million to $3.2 billion, while revenues slipped $200 million to $20.3 billion. Earnings per share fell $0.12 to $1.51.

Jane Fraser, the bank's CEO, pointed to a 2% reduction in expenses and said the "quarter contains multiple proof points that we are moving in the right direction and that our strategy is gaining traction."

The stock fell 1.7% but has gained 22% this year.