Goldman and Morgan Stanley post strong profits

The leading US investment banks — Goldman Sachs and Morgan Stanley — each reported third quarter profits that beat analysts’ expectations yesterday, helped by strong performance in their trading operations and betterthan-expected revenue from stock underwriting.

Goldman Sachs, the larger of the two banks, reported a profit of $2.52 billion (Dh9.25 billion) in the quarter, or $6.28 per share. That’s up from $2.13 billion, or $5.02 per share, in the same period a year earlier. The result topped the estimate of $5.38 per share from Wall Street analysts, according to FactSet.

Meanwhile, Morgan Stanley earned a profit of $2.11 billion, or $1.17 per share, which is up 19 per cent from a year ago, when the bank earned $1.78 billion, or 93 cents per share. The results beat analysts’ estimates of $1.01 per share, according to FactSet.

Goldman shares rose 1.4 per cent to $218.15 in premarket trading, while Morgan shares gained 2.7 per cent to $44.65.

Both banks make most of their money from advising wealthy clients and corporations on deals, as well as substantial trading operations. While both banks trade stocks, bonds, commodities and currencies, Morgan is known more for its stock trading operations while Goldman leans more into bonds, commodities and currencies.

Stock underwriting revenues were unexpectedly healthy at both banks, helped by more companies going public. Morgan had equity underwriting revenues of $441 million from $273 million a year ago, and Goldman reported underwriting revenues of $1.06 billion, up 20 per cent from 2017.