Goldman Sachs 10-Qquarter ended 2026-09-30

Executive Summary

Goldman Sachs earns fees, trading revenue and interest by providing investment banking, markets, investment management and lending services to corporations, institutions and wealthy individuals. It is expanding investment management through client inflows and acquisitions while exiting consumer activities through the Apple Card transition. Q3 revenue rose 23%, led by equities financing and trading, while investment banking and asset management also contributed. Revenue growth slowed slightly from the nine-month pace, but costs grew more slowly than revenue and diluted EPS increased 39%. The opportunity is to combine strong institutional franchises with growing management fees; the constraint is a larger balance sheet that has pushed the common equity tier 1 capital ratio down to 12.4%, narrowing room for further expansion and shareholder distributions.

What's Happening in the Business

Equities drove the quarter, particularly financing and intermediation—helping clients fund positions and execute trades. Investment banking fees also recovered, while fixed income, currencies and commodities revenue was broadly flat: stronger financing, currencies and commodities offset weaker mortgage, credit and interest-rate intermediation. Global Banking & Markets therefore remained the main growth engine, but its revenue growth moderated from the nine-month pace.

Asset & Wealth Management is building its fee base through inflows and acquisitions. Assets under supervision reached $4.10T, up 19% Y/Y; Q3 net inflows of $83B outweighed market declines. Completed acquisitions of Industry Ventures and Innovator added investment-management capabilities, while agreements to acquire NEOS and LCN Capital Partners would extend that expansion if completed. Higher assets supported management fees, although fee-rate compression and weaker private-banking revenue tempered the benefit.

The consumer retreat still carries costs. Apple Card portfolio markdowns reduced Platform Solutions revenue and widened its loss. Management expects the transition to another issuer, agreed in December 2025, to take ≈24 months; until completion, the business can continue to produce valuation losses.

Key Financial Highlights

• Equities: $6.44B, +72%, accounted for most of Global Banking & Markets’ revenue increase; investment banking fees added $3.22B, +21%. Segment revenue growth slowed from 34% for nine months.
• Management fees: $3.59B, +22%, supported the asset-management franchise; incentive fees reached $587M vs $76M, making part of the quarter’s improvement less predictable. The long-term management-fee rate slipped to 30 bp from 31 bp.
• Expenses: $11.3B, +20%, included transaction-based costs of $3.02B, +54%, and an ≈$450M Goldman Sachs Gives contribution that reduced EPS by ≈$1.00. The efficiency ratio nevertheless improved to 60.5% from 62.3%.
• Valuation effects: A $936M pre-tax debt valuation gain materially supported earnings. Separately, large gains on borrowings with embedded derivatives should not be read in isolation because economically related hedges can offset them elsewhere.
• Capital deployment: Assets increased 21% from year-end to $2.18T, financed partly through deposits and borrowings. Goldman repurchased $12.0B of common stock over nine months; outstanding common shares fell 2.7% net of issuance. The standardized common equity tier 1 ratio declined from 14.3%, leaving a 100 bp cushion above its 11.4% requirement.

Risk Assessment

• Capital headroom: Balance-sheet expansion, acquisition-related deductions and distributions have narrowed the capital cushion to the top of management’s targeted buffer range, potentially constraining growth or buybacks.
• Markets and valuation: Greater trading exposure increases sensitivity to market disruption, while valuations using unobservable inputs introduce uncertainty; conflict involving Iran, oil prices and inflation could also weaken client activity.
• Credit deterioration: Loans at least 90 days past due rose to $902M from $372M at year-end, despite improved portfolio ratings, showing pockets of stress that could require further provisions.
• Apple Card execution: Transition delays or unmet closing conditions could prolong consumer exposure and additional markdowns.

No risk-factor section was found in this 10-Q. A 10-Q does not have to restate the risk factors in the annual report. Full list: FY2025 10-K.

What to Watch

• Equities durability: Revenue grew 72%; continued financing and intermediation strength would validate the expansion, while weaker activity would expose dependence on a strong trading period.
• Management-fee growth: Strong inflows are overcoming market declines, but fee rates slipped. Sustained fee growth would validate expansion; weakening inflows or further pricing pressure would undermine it.
• Apple Card exit: Management’s ≈24-month transition is underway. Completion would remove exposure; delays or further markdowns would extend the drag.
• Capital discipline: The cushion is 100 bp. Stabilization alongside business growth would support distributions; further erosion could force slower expansion or reduced buybacks.

Not present in this filing: Part II Item 1A, Risk Factors.