The US bank's consumer and wealth management arm reported broadly positive results for the third quarter of 2022.

Goldman Sachs yesterday said that net revenues in its wealth and consumer segment stood at $2.38 billion for the third quarter, rising by 18 per cent on the same period a year ago and 9 per cent from the previous three-month period.

Net revenues in wealth management were $1.63 billion, flat on a year ago, caused by “significantly lower Incentive fees” and offset by significantly higher net revenues in private banking and lending, due to the impact of higher loan and deposit balances.

Management and other fees were essentially unchanged, Goldman Sachs said in a statement.

Diluted earnings per common share stood at $8.25 for the third quarter of 2022 compared with $14.93 for the third quarter of 2021 and $7.73 for the second quarter of 2022, and was $26.71 for the first nine months of 2022 compared with $48.59 for the first nine months of 2021.  

Operating costs were $7.70 billion for the third quarter of 2022, rising 17 per cent from the third quarter of 2021 and 1 per cent higher than the second quarter of 2022. The firm’s efficiency ratio for the first nine months of 2022 was 62.7 per cent, compared with 52.8 per cent for the first nine months of 2021.

The increase in operating expenses compared with the third quarter of 2021 included higher compensation and benefits expenses (reflecting a smaller reduction in the year-to-date ratio of compensation and benefits to net revenues, net of provision for credit osses, compared with the prior year period), the inclusion of NNIP and GreenSky, higher net provisions for litigation and regulatory proceedings, and higher transaction based expenses.  

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Shares in the US firm closed up 2.33 per cent at the close on Tuesday.

“While Goldman Sachs’ earnings were down over 40 per cent from a year ago, results were still fairly decent from a historical perspective. The company reported net income to common shareholders of $3 billion, or $8.25 per diluted share, on $12 billion of net revenue,” Michael Wong, senior director, Morningstar, said. “Net revenue fell 12 per cent from a year ago and net income fell 44 per cent, while net revenue sequentially increased 1 per cent and net income increased 6 per cent.”

“2020 and 2021 net revenue were abnormally high, so we believed that revenue would have reset lower over the 2022 to 2024 period even if the global economy wasn’t on the borderline of a recession,” Wong added.