Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM), and Citigroup (NYSE:C) all reported better-than-expected performances for the third quarter. While Goldman Sachs’s results echoed those of JPMorgan, and were good enough for the bank to raise its quarterly dividend to 50 cents per share, analysts still found issues on its balance sheet.
Some analysts had expected even greater earnings from the bank, given the strong results at investment banking divisions of JPMorgan and Citigroup.
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On Tuesday, Goldman Sachs posted adjusted net earnings per share of $2.85, a marked increased from the 84-cents-per-share loss reported last year, and revenue rose to $8.4 billion. The higher-than-expected revenue resulted from the bank’s large gains in its stocks and bonds investments.
Analysts were expecting earnings per share of $2.12 on revenue of $7.2 billion from the investment bank.
Like Goldman Sachs, trading for clients in mortgages also propelled JPMorgan’s quarterly results higher, according to the Washington Post. The bank, which reported its quarterly results Friday, saw mortgage lending revenue rise 36 percent over the quarter.
Several negatives, however, stood out in the report. Reuters noted that while revenue increased more than twofold over the same quarter of last year, Goldman Sachs’s return on equity remained at a single-digit percentage rate. Furthermore, the company’s “investment banking and trading results showed signs of weak client activity.”
Even with Goldman Sachs’s overall positive results, the company’s stock price stayed unchanged after the results were announced. “The stock remained largely flat after the disclosure of its performance, which leads us to conclude the fact that much of the improvement in results was already priced in,” said Seeking Alpha.
The Washington Post also reported that Goldman Sachs remained “more cautious than celebratory” over the results, citing Goldman CEO’s tone in the company’s earnings statement. After the investment bank reported its results, Lloyd Blankfein said the quarter was “generally solid in the context of a still challenging economic environment.”
The investment bank, the Washington Post said, still showed signs that it “could have gaps in its armor.” Over the last quarter, the bank shed 1,600 jobs, which was five percent of its workforce, and cut spending on communications, occupancy, and market development.
But Goldman was not the only bank to post better-than-expected results mitigated by issues on its balance sheet.
Citigroup, which bucked an industry wide trend by increasing capital levels, reported on Monday an 88 percent decline in third-quarter net income. The decrease in income came despite gains its securities and banking unit; charges resulting from a rise in value of Citigroup’s debt and the write-down of its stake in the Morgan Stanley (NYSE:MS) Smith Barney brokerage affected its results.
As Nomura analyst Glenn Schorr said to the Wall Street Journal, “For Citigroup, it is two steps forward and one step back.”