Goldman's profits soared 45% as dealmaking returned to normal

Goldman Sachs ( GS ) third-quarter profit jumped 45% from a year ago as dealmaking and stock trading lifted the Wall Street giant.

Net income was about $3 billion, up from roughly $2 billion in the third quarter of 2023. Investment banking fees were $1.8 billion, up 20% from the year-ago period, as companies issued more debt and equity.

Even its advisory fees have seen a modest increase thanks to a revival in mergers and acquisitions.

Goldman's stock rose more than 3% in pre-market trading on Tuesday and is up 28% on the year to a record high, outperforming its other big-bank rivals.

The results are the latest sign that a two-year deal drought appears to be ending as the Federal Reserve begins to cut interest rates, a move that is expected to spur more deals in the year ahead.

Goldman's rivals are showing a similar boost to their Wall Street operations. Investment banking fees at Wells Fargo (WFC) rose 37% in the third quarter from a year ago, while they rose 31% at JPMorgan (JPM). Bank of America ( BAC ) reported Tuesday that its investment banking fees rose 18%.

Some other parts of Goldman were also good. Goldman's trading revenue grew 2% year over year, driven primarily by equity traders, while wealth and asset management revenue rose 16%.

But Goldman posted a pretax hit to its consumer business of $415 million in earnings related to a credit card partnership with General Motors ( GM ) that Goldman is shedding. Barclays said Monday it was buying that business.

Goldman is also trying to close a credit-card partnership with Apple ( APPL ).

The $415 million hit shows that Goldman is still in the midst of a broad layoff from consumer lending as it tries to refocus on its core competencies of dealmaking, trading and asset management.

But it is in a much stronger position than a year ago, when CEO David Solomon grappled with a slowdown in dealmaking, a costly exit from consumer lending and a series of high-profile departures from the firm.

“Our performance demonstrates the strength of our world-class franchise in an improved operating environment,” CEO David Solomon said in a statement.

David Hollerith is a senior reporter at Yahoo Finance covering banking, crypto and other areas of finance.

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