Goldman Sachs beats earnings estimates

Investment banking giant Goldman Sachs (GS) beat Wall Street expectations Thursday, reporting far higher than forecast third-quarter earnings and revenue.

But shares of New York-based Goldman nonetheless fell as the bank also reported some quarterly financial measures slipped from results earlier in the year.

Goldman shares closed down more than 2.6% at $172.58 in Thursday trading.

The bank reported a third-quarter profit of $2.24 billion, up from $1.52 billion during the three-month period last year. The result powered Goldman's earnings per share to $4.57, easily topping the $3.21 average consensus of financial analysts in a FactSet survey.

Goldman reported earnings per share of $2.88 for the same period last year.

Net revenue for the July-September quarter was $8.39 billion, Goldman reported, also well above the $7.82 billion forecast by analysts in the FactSet survey.

The bank increased its quarterly dividend to $0.60 per common share.

Net revenues from investment banking were $1.46 billion for the quarter, 26% higher than the same period in 2013 — but down 18% from this year's second quarter.

Similarly, the bank reported that net revenues in investing and lending totaled $1.69 billion for the third quarter, up from 2013 but 18% down from the second quarter.

Net revenue in equities client execution were also lower during this year's July-September period, reflecting a decrease in cash products," the bank said.

Goldman said net revenues from underwriting totaled $870 million, up 17% from the same period last year. The increase was driven by higher net revenues in equity underwriting, principally from the numerous initial public offerings this year, the bank said.

The bank was the lead underwriter for the record September IPO in which China e-commerce giant Alibaba (BABA) raised $21.8 billion, topping the $17.8 billion raised by credit card marketer Visa's (V) IPO and Facebook's (FB) $16 billion IPO in 2012.

However, the increase in equity underwriting was partly offset by lower net revenues in debt underwriting, the bank reported.

Goldman said it ranked first worldwide for its work on mergers and acquisitions completed so far this year. During a Thursday conference call with Wall Street analysts, CFO Harvey Schwartz highlighted the bank's role on the Tyson Foods (TSN) merger with Hillshire Brands, along with Switzerland based pharmaceutical giant Roche Holding's acquisition of biotech firm InterMune.

"During the quarter, equities operated in an environment characterized by continued low volatility levels and generally lower market volumes in the United States and Europe compared with the second quarter of 2014," the bank said.

During the conference call with analysts, Schwartz said investors raised concerns about lack of market volatility at the start of the third quarter. Now, amid this week's sharp market sell-offs, market participants are worried about excessive volatility.

"It's a little too hot, too cold," said Schwartz, indicating it was too soon to predict how the current selling momentum would shake out.