Goldman Sachs capped a stellar third quarter for dealmakers by posting a 225% increase in M&A fees, and staved off a slide in fixed income trading revenues that hit its Wall Street rivals.
The US banking giant made $1.6bn in M&A fees during the third quarter, well ahead of the $1.1bn expected by analysts and the biggest haul of any Wall Street bank.
Goldman Sachs unveiled net profit of $5.4bn for the third quarter of 2021, again above market consensus and 60% ahead of the same period last year, with revenues of $13.6bn up by 26%.
While banks’ trading desks supported slumping revenues in other business lines at the height of the pandemic, dealmakers have been on a tear in 2021. Goldman follows record quarters for M&A fees at Citigroup, JPMorgan and Morgan Stanley, with the latter nearly quadrupling revenues on the same period last year.
In a year when M&A activity has soared, Goldman Sachs has extended its lead at the top of the fee league tables. It has made $3.5bn from deals so far in 2021, according to data provider Dealogic, taking 11.6% of the market — up from 9.9% at the same point last year. That’s a 95% increase on 2020.
Goldman’s investment banking revenues were the second highest in its history in the third quarter, swelling by 83% to $3.7bn, as both M&A and equity capital markets revenues increased. Goldman still ranks behind JPMorgan at the top of the overall investment banking revenue, according to Dealogic, having brought in $8.9bn so far this year.
The US bank is in the midst of a transformation under chief executive David Solomon, which has seen it expand beyond its traditional Wall Street roots to focus on more retail and corporate banking functions. In September, it unveiled a $2.2bn deal to acquire buy now pay later fintech firm GreenSky and in August it bought Dutch asset manager NN Investment Partners for $1.9bn.
“The opportunity set continues to be attractive across all of our businesses and our focus remains on serving our clients and executing our strategy,” Solomon said in a statement.
However, trading and investment banking still accounted for 68% of overall revenues during the quarter.
The pandemic boom in fixed income trading has faded during the past six months, but Goldman’s revenues in the unit were flat in the previous year at $2.5bn. A 51% increase at its equities trading unit — the biggest increase on the street — meant overall markets revenues were up 23%.
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