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Abu Dhabi, UAESaturday 17 November 2018

Goldman earnings surge as Wells Fargo prepares for Brexit

UPDATE: Goldman profit up 20 per cent in third quarter while Wells Fargo eyes France

The US lender easily topped Wall Street analyst expectations for the quarter. Reuters
The US lender easily topped Wall Street analyst expectations for the quarter. Reuters

Goldman Sachs reported a better-than-expected quarterly profit on Tuesday, driven by its equities trading and investment banking businesses that offset weakness in bond trading.

This is Goldman's last quarterly results under Lloyd Blankfein, who led the company as chief executive for 12 years before handing over the reins to David Solomon in October. The bank said fixed income, currency and commodity trading revenue fell 10 per cent to $1.31 billion.

Goldman is typically more sensitive to swings in market volatility than its peers because its large trading business overshadows its other banking units. Revenue from equities trading rose 8 per cent to $1.79bn. At Morgan Stanley, Goldman's traditional rival, revenue from equity trading rose 6 per cent, while bond trading rose marginally.

Revenue from Goldman's investment banking business rose 10.2 per cent, while its overall net revenue rose 3.8 per cent to $8.65bn.

Net earnings attributable to common shareholders rose to $2.45bn, or $6.28 per share, in the third quarter ended September 30 from $2.04bn, or $5.02 per share, a rise of just over 20 per cent.

Analysts on average were looking for $5.38 per share, according to I/B/E/S data from Refinitiv.

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Seperately, Wells Fargo said on Tuesday it has applied for an investment firm licence in France as part of its Brexit strategy.

The San Francisco-based bank is planning to offer a range of capital markets and investment banking services to its European and international customers, subject to regulatory approval from French Prudential Supervision and Resolution Authority.

The new unit will be called Wells Fargo Securities Europe.

Financial centres such as Luxembourg, Paris and Frankfurt are battling each other to attract banks, insurers and asset managers in Britain who need a base in the European Union after the UK exits the bloc in 2019.

Companies from across the EU use London for currency trading, derivatives and managing investment funds.

Some EU policymakers want parts of these activities shifted to the continent after Brexit to avoid relying on what will then be a foreign financial centre.

Wells Fargo said it will make more announcements on its Brexit strategy in the near future.