Before the U.S. market opened on Tuesday, Goldman Sachs (GS.US) released its financial results for the third quarter of 2026.
The report showed that Goldman Sachs' Q3 net revenue rose 23.1% year-over-year to $18.68 billion, beating the market consensus estimate by $1.79 billion. Net profit came in at $5.294 billion, up 29% year-over-year. GAAP diluted earnings per share stood at $17.01, surpassing the market consensus estimate by $3.92. The annualized return on common shareholders' equity (ROE) reached 18.7%, a significant improvement from 14.2% in the same period last year. The results were primarily driven by the equity trading business.
Goldman Sachs' Global Banking and Markets division posted Q3 net revenue of $13.458 billion, up 32% year-over-year. Within that, the equities business generated net revenue of $6.441 billion, surging 72% year-over-year. Fixed income, currency and commodities (FICC) became the main drag on overall performance. The division's net revenue for the quarter was $3.473 billion, edging down about 1% year-over-year. It not only failed to sustain its growth momentum but also fell noticeably short of market expectations, making it the primary drag on this quarter's results.
The investment banking business delivered a standout performance this quarter, with revenue across all major sub-segments exceeding market expectations. Investment banking fees totaled $3.224 billion, up 21% year-over-year. Advisory revenue reached $1.65 billion, up 18% year-over-year, reflecting a recovery in M&A activity. Equity underwriting revenue came in at $666 million, slightly above the expected $646 million. Debt underwriting revenue was $904 million, ahead of the anticipated $824 million.
The Asset and Wealth Management division reported net revenue of $5.051 billion, up 14% year-over-year. As of September 30, assets under supervision rose to $4.097 trillion, an increase of 19% from the same period last year. Goldman Sachs also completed two major acquisitions this quarter to expand its asset management business, which now exceeds $4 trillion in scale. The bank acquired exchange-traded fund (ETF) provider NEOS Investments for $2.25 billion and commercial real estate investment firm LCN Capital Partners for up to $410 million.
Goldman Sachs CEO David Solomon stated: "Against a complex operating environment, clients continued to turn to Goldman Sachs for world-class advisory, execution and financing support, making this quarter's net revenue the second-highest in history and year-to-date net revenue a record high."
It is worth noting that Goldman Sachs' incentive compensation expenses surged nearly eightfold year-over-year this quarter, reaching $587 million. According to reports, this portion of revenue is closely tied to Goldman Sachs' business of arranging investments for wealth management clients participating in SpaceX's early financing round, with the fees earned far exceeding the compensation it received for advising on SpaceX's largest-ever IPO.
As of press time, Goldman Sachs shares were up more than 3% in Tuesday's pre-market trading.