Goldman Sachs Group said third-quarter earnings surged 84 per cent to a record, led by gains from trading stocks, bonds and currencies and the highest investment-banking fees in four years.
Net income climbed to US$1.62 billion ($2.3 billion), or US$3.25 a share, in the three months ended August 26, fromUS$879 million, or US$1.74, a year earlier, the New York-based firm said yesterday.
Analysts surveyed by Thomson Financial expected Goldman to earn US$2.38 a share. The second-biggest US securities firm by market value had record net revenue of US$7.3 billion.
The profit, boosted by US$4.2 billion in trading revenue, put Goldman on pace for its best year ever.
The firm, led by chief executive Henry Paulson, reported bigger earnings gains than Lehman Brothers and Bear Stearns, which lag behind Goldman in trading and arranging mergers.
Paulson, 59, was paid US$29.8 million last year, up 40 per cent from 2003, after Goldman's annual profit reached a record US$4.6 billion. He holds 3.8 million Goldman shares valued at more than US$430 million.
"Goldman does what they do seemingly better than everyone," said Michael Vogelzang, who oversees US$5 billion as chief investment officer at Boston Advisors. "They make money in volatile markets."
The profit gain compared with Lehman's 74 per cent increase and Bear Stearns' 34 per cent advance.
Morgan Stanley, the largest securities firm, may post a 34 per cent gain in third-quarter earnings this week, analysts said.
Goldman had a 25 per cent return on equity, compared with Lehman's 23 per cent and 17 per cent at Bear Stearns.
Goldman also said it bought back 16.3 million shares of its common stock in the quarter and that its board on September 16 approved the repurchase of a further 60 million shares.
"We have ample capital to grow the business and we need to slow down the growth of the capital," chief financial officer David Viniar, 50, said on a conference call with analysts.
"We think share buybacks are more efficient than dividends."
Revenue for fixed-income, currencies and commodities trading hit a record US$2.6 billion, up 41 per cent, accounting for 36 per cent of the total. Equity trading and commissions revenue jumped 75 per cent to US$1.6 billion.
