The boom in mergers and acquisitions breaks Goldman Sachs’ profit expectations


The boom in mergers and acquisitions breaks Goldman Sachs’ profit expectations


Goldman Sachs’ results shattered expectations because of the boom in deal making.

The US investment bank – known as the financial sector’s ‘vampire squid’ – yesterday reported a £ 3.8 billion profit in the three months to October, a 66 per cent higher (M&A) activity compared to the same period last year between merger and acquisition increases.

Acquisitions have been made more attractive by lower interest rates, making it easier to fuel purchases through debt.

Goldman Sachs – known as the financial sector’s ‘vampire squid’ – yesterday reported a profit of 8 3.8 billion in the three months to October, up 66pc from the same period last year

Goldman said it had retained its number one position for M&A during the period, and its revenues from its financial advisory unit, including M&A fees, rose 225 per cent to £ 1.2billion.

The company’s investment banking division helped deliver its second-largest quarterly revenue figure of $ 2.7 billion, an increase of 88 percent compared to the same period in 2020.

Goldman’s total revenues rose 26 per cent to £ 9.9 billion. The business saw strong performance in its consumer banking unit, which included Marcus Wealth Management App, as revenues in the segment rose 17 per cent to £ 278 million.

This boost is attributed to higher credit card balances and account deposits.

Marcus, which also provides consumer savings accounts, is part of Goldman boss David Solomon’s strategy to diversify the bank’s revenues and make it less reliant on investment banking.

“The third quarter saw a strong performance and accelerated our investment in the growth of Goldman Sachs,” Solomon said.

He said: ‘Looking forward, the set of opportunities continues to be attractive in all our businesses and our focus remains on serving our customers and executing our strategy.’

Bank shares on Wall Street are up more than 3 percent in the wake of the blockbuster results.

Goldman’s numbers follow similarly strong earnings from other US financial titans, with rival JPMorgan also reporting Wednesday’s third-quarter profit surpassing market expectations.

Similarly, Bank of America delivered quarterly revenue of $ 16.6 billion on Thursday, topping market forecasts, while Citigroup increased its third-quarter revenue to $ 3.3 billion from $ 2.3 billion a year earlier.

Strong results boosted US markets, with the Dow Jones Industrial Average above 1pc, close to 35,285 points.

While the bank’s strong results on the state of the global economy have eased some investors’ nerves, there are fears that inflation, supply chain disruptions and rising commodity prices will cause the market to fluctuate in the winter months.

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