Goldman Sachs Posts 30-Percent Profit Jump

Goldman Sachs Group Inc. (GS) on Tuesday posted a 30 percent jump in profit for its latest quarter, helped by strong growth across its segments.

The New York-based investment bank earned $879 million, or $1.74 a share, for the third quarter ended Aug. 27, compared with $677 million, or $1.32 a share, in the same quarter a year ago.

The latest results beat the forecast of $1.43 a share by analysts surveyed by Thomson First Call.

Net income for the latest period, however, dropped 26 percent from the $1.19 billion reported in the second quarter.

Third-quarter results were affected by a decline in the value of the company's investment in the convertible preferred stock of Sumitomo Mitsui Financial Group, Inc. (search), Goldman Sachs said.

Net revenue in investment banking rose to $890 million for the third quarter from $687 million a year ago, but fell from $953 million in the second quarter. Net revenue in financial advisory and the firm's underwriting business during the quarter improved from the same period in 2003.

Net revenue in trading and principal investments was $2.7 billion, 15 percent above the third quarter last year and 26 percent below this year's second quarter. The company attributed the decline from the second quarter to changes in the value of the Sumitomo Mitsui investment.

Net revenue in asset management and securities services was $941 million, up 23 percent from a year earlier and essentially unchanged from the second quarter of 2004.

Operating expenses totaled $3.24 billion for the latest quarter, 15 percent higher than the same period a year ago and 14 percent lower than the second quarter of 2004.

Total revenue, net of interest expense and cost of power generation, jumped 19 percent to $4.53 billion.

As of Aug. 27, total capital was $95.19 billion, consisting of $23.51 billion in shareholders' equity and $71.68 billion in long-term debt.

Assets under management increased 17 percent from a year ago to a record $426 billion, with net asset inflows of $10 billion during the quarter.

Annualized return on average tangible shareholders' equity was 19.2 percent for the third quarter, and annualized return on average shareholders' equity was 15.1 percent.

Shares of Goldman Sachs traded Tuesday morning at $93.44, up $1.76, or 1.9 percent, on the New York Stock Exchange (search).