Earnings Preview | Investment Banking Recovery Becomes Key Driver, Goldman Sachs Q3 Performance May Exceed Expectations Again

According to Zhitong Finance APP, Goldman Sachs (GS.US) will announce its third-quarter earnings before the U.S. stock market opens on Tuesday. Analysts expect Goldman Sachs' third-quarter revenue to increase by 11.9% year-on-year to $14.21 billion, higher than the 7.5% increase in the same period last year; the adjusted earnings per share are expected to be $10.57. Over the past two years, Goldman Sachs has exceeded analysts' revenue expectations in every quarter, with an average beat of 6.6%. The new earnings season for U.S. stocks will kick off this week, with the six major U.S. banks—including JP Morgan (JPM.US), Goldman Sachs, Morgan Stanley (MS.US), Bank of America (BAC.US), Citigroup (C.US), and Wells Fargo (WFC.US)—leading the charge. The market currently expects that, benefiting from a strong recovery in investment banking and the resilience of the U.S. economy keeping borrowers in good shape and supporting consumer and commercial loan sectors, the third-quarter performance of these six major banks will be strong. Meanwhile, investors will closely monitor these banks' economic outlooks and expectations for investment banking and trading businesses. Goldman Sachs' second-quarter performance significantly exceeded market expectations. The bank's second-quarter revenue increased by 14.5% year-on-year to $14.58 billion, surpassing analysts' expectations by 7.3%. Goldman Sachs' second-quarter equity trading revenue reached $4.3 billion, exceeding analysts' expectations by about $600 million. This impressive performance also propelled the bank's overall profit for the second quarter to $3.7 billion (equivalent to $10.91 per share), a 22% increase from $3.04 billion (or $8.62 per share) in the same period last year, exceeding market expectations. Some of Goldman Sachs' peers have already announced their third-quarter results. Jefferies reported a 21.6% year-on-year revenue increase in the third quarter, exceeding market expectations by 8.4%; FactSet's third-quarter revenue increased by 6.2% year-on-year, surpassing market expectations by 0.6%