Goldman Sachs stock jumps after big profit beat, as ROE was highest in a decade

Shares of Goldman Sachs Group Inc. GS, -1.54% jumped 3.0%, to pace all of the Dow Jones Industrial Average’s DJIA, -0.54% premarket gainers Wednesday, after the bank and broker reported a third-quarter profit that rose well above expectations and revenue that topped forecasts. Net income nearly doubled to $3.48 billion, or $9.68 a share, from $1.79 billion, or $4.79 a share, in the year-ago period, beating the FactSet consensus of $5.54 a share. Total revenue increased 29.5% to $10.78 billion, above the FactSet consensus of $9.38 billion, as annualized return on equity of 17.5% was the highest quarterly ROE since 2010. Investment banking revenue rose 7% to $1.97 billion to beat expectations of $1.85 billion, while global markets revenue rose 29% to $4.55 billion. Within global markets, equities revenue increased 10% to $2.05 billion to top expectations of $2.03 billion, while fixed income, currency and commodities (FICC) revenue grew 49% to $2.50 billion to beat expectations of $2.03 billion. “The operating environment continued to recover during the third quarter of 2020 from the impact of the COVID-19 pandemic earlier in the year as global economic activity significantly rebounded following a sharp decrease in the second quarter, market volatility declined modestly, and monetary and fiscal policy remained accommodative,” Goldman said in a statement. The stock has lost 8.3% year to date through Tuesday, while the Dow has edged up 0.5%.

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