Goldman Sachs, Morgan Stanley ride deals to score big 3Q earnings beats

Shares of US investment bank Goldman Sachs Group Inc (NYSE:GS) climbed before the opening bell Tuesday after it posted third-quarter earnings that handily beat Wall Street expectations on the back of strong deal making and lower taxes.

Shares in Goldman Sachs climbed 1.2% to $218 in premarket trade.

For the quarter ended June 2018, Goldman Sachs reported earnings of $6.28 per share on revenue of $8.6 billion. That was well above the expectations of analysts who predicted earnings of $5.42 per share on revenue of $8.4 billion. Revenue grew 3.8% on a year-over-year basis.

Investment-banking revenue rose 10% from a year earlier to $1.98 billion in revenue, exceeding the $1.8 billion estimate, on better-than-expected results in mergers advisory and capital markets underwriting.

The quarterly results are the last of Lloyd Blankfein’s tenure, which began in 2006 and ended Oct. 1 when David Solomon took over as Goldman’s CEO.

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Solomon’s main challenge is to make good on a plan to boost revenue by $5 billion by broadening its banking and trading client base, finding growth in smaller markets and pushing into retail products like personal loans.

Meanwhile, rival Morgan Stanley (NYSE:MS) also reported third quarter earnings that topped analysts’ expectations on both the top and bottom lines on strong investment banking results.

For the quarter ended June 2018, the bank posted earnings of $1.17 per share on revenue of $12.6 billion. The consensus earnings estimate was $1 per share on revenue of $9.5 billion. Revenue grew 16.8% on a year-over-year basis.

The bank said the improved results were boosted by higher IPO revenues and convertible offerings as well as better loan and bond fees. Morgan Stanley’s investment banking division, which includes deal advisory and stock and bond issuance, generated $1.5 billion in revenue compared with the $1.3 billion estimate, from Thomson Reuters. That puts investment banking revenue up more than 15% year over year.

Shares of Morgan Stanley shot up 2.3% to $44.50

Contact Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive

– (Updates with Goldman results) –

Story by ProactiveInvestors