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Goldman Sachs, the world's most profitable investment bank, today smashed Wall Street's forecasts for its third-quarter earnings with huge profits made from trading and holding investments on its own books.
In stark contrast Citigroup, which has huge retail businesses as well as investment banking, announced another quarter of losses as US consumers continued to feel the pinch and failed to pay down their loans.
Goldman's profit after tax almost quadrupled on the same quarter a year ago to $3.19 billion (£1.99 billion) but was 7% down on the second quarter.
Earnings per share were $5.25, which was $1 more than analysts' forecasts. But almost all that extra $1 of earnings came from Goldman's decision to cut the rate of bonuses it paid staff in the last quarter and the shares opened lower on Wall Street.
“Although the world continues to face serious economic challenges, we are seeing improving conditions and evidence of stabilisation, even growth, across a number of sectors,” chairman Lloyd Blankfein said.
Investment banking revenues from advising on deals were sharply down on the second quarter and on a year ago at $899 million.
But in commodities, currencies and bond trading and investing, revenues were almost four times those of a year ago when Goldman was at the height of the global financial crisis.
In London, where Goldman has some 5500 employees, growth was driven by a series of high-profile deals.
The bank has advised Anglo American in its fending off of a £56 billion merger plan by Xstrata and it is also advising Cadbury in defending the £10.3 billion bid from Kraft.
Done deals in the third quarter included Centrica's £1.3 billion takeover of North Sea oil producer Venture Exploration and Sara Lee's sale of its personal care business to Unilever for £1.2 billion.
Goldman was also one of the four banks selected by the UK Government for its £7 billion syndicated gilt issue.
Citigroup's loss of $101 million for the third quarter was far better than analysts had expected even though it took another £8.8 billion hit on bad debts and loans.
Chief executive Vikram Pandit said investment banking had a record quarter.
Yesterday JPMorgan reported its best quarter since 2007 with a forecast-busting $3.6 billion of net profit.
That helped push the Dow Jones index above 10,000 for the first time in more than a year.
Goldman chief financial officer David Vinier, asked why the figures were less strong than in the second quarter, said: “Our second quarter was a record in vitually every single business.”
The third quarter was its third best ever in equities, fixed income, commodities and currencies.
“So it was a fantastic quarter, just not as fantastic as the second quarter.”
