GS — Q3 2026 Financial Report Analysis

Goldman Sachs earned $5.29 billion in the third quarter of 2026, up 29% from $4.10 billion a year earlier, on net revenues of $18.68 billion (+23%). Diluted earnings per share rose 39% to $17.01. As in the second quarter, stock trading did most of the work: Equities revenue rose 72% to $6.44 billion and supplied $2.71 billion of the $3.50 billion revenue increase. Against the record second quarter, though, revenue fell 8% and EPS fell 19% (from $20.98), as trading with clients in both stocks and bonds slowed. Two lines that had helped earlier in the year turned negative: losses on the Apple Card loans being sold, and markdowns on debt investments in the asset management arm.

This analysis is based on Goldman's earnings release (Exhibit 99.1 to its October 13, 2026 Form 8-K). The full Form 10-Q for the quarter has not been filed yet, so segment and management-discussion detail is limited to what the release covers. The release also labels its balance sheet, capital ratios and assets under supervision as preliminary estimates.

Headline figures

Some terms used above:

• Net revenues: total revenue after subtracting the interest Goldman pays on its own borrowing. Most of Goldman's revenue comes from trading, fees and investments. Net interest income, the gap between interest earned and interest paid, was only about a fifth of the total.
• Pre-tax margin: pre-tax earnings as a share of net revenues. Goldman doesn't report an "operating margin" in the usual sense.
• Efficiency ratio: operating costs divided by net revenues. Lower is better. The release gives it only for the first nine months. Our own calculation for the quarter alone is 60.5% (11,308 ÷ 18,679).
• ROE (return on equity): annualized profit to common shareholders divided by their equity. The release doesn't give the year-ago quarter's figure or return on tangible equity (ROTE).
• CET1 ratio: the firm's highest-quality capital, mostly common equity, as a share of risk-weighted assets. Risk-weighted assets are the balance sheet, scaled up or down by how risky each item is. Regulators set a minimum.

The release reports no net interest margin and no net charge-off ratio, so those figures are not shown.

Segment results

Global Banking & Markets (trading and dealmaking). Equities drove the year-on-year gain. The release credits "significantly higher net revenues in prime financing and portfolio financing" in the financing business, and derivatives in trading with clients (intermediation). Bond, currency and commodity trading (FICC) was flat overall at $3.47 billion. Mortgages, credit and interest-rate products were weaker, and currencies and commodities were stronger. Investment banking fees rose 21% to $3.22 billion. Unlike the second quarter, merger advice led the gain: Advisory rose 18% on "an increase in completed mergers and acquisitions volumes". The release puts the debt underwriting increase down mainly to "investment-grade activity", not leveraged finance.

Asset & Wealth Management. Revenue rose 14%, but the mix changed. Recurring management fees rose 22% on higher average assets under supervision. Incentive fees, the performance fees paid when funds distribute gains, jumped to $587 million from $76 million because of "fund distributions". Against that, Investments revenue nearly disappeared ($50 million, against $342 million) on "net markdowns in debt investments compared with net markups in the prior year period". Private banking revenue fell 22% because the year-ago quarter had included interest received on a previously impaired loan.

Platform Solutions. Revenue fell to $170 million, mainly from "net markdowns related to the Apple Card loan portfolio", which Goldman moved to held-for-sale in the fourth quarter of 2025. Held-for-sale loans are marked to their expected sale price, so a drop in that price is booked straight away as a revenue loss.

Regions. Asia revenue rose 90% to $3.80 billion and made up 20% of the total, up from 13%. EMEA (Europe, Middle East and Africa) was flat on a year ago at $3.21 billion and fell 29% from the second quarter.

What the headline numbers hide

Lower pay accruals did much of the margin work. Compensation and benefits fell to $5.12 billion from $6.10 billion in the second quarter, a 16% drop on an 8% revenue decline. Over nine months the compensation ratio is 29.6% (16,638 ÷ 56,244). The third quarter alone is 27.4%, which implies the first half was accrued at about 30.6%. The release doesn't explain the quarterly pattern. If pay had been 29.6% of revenue in the third quarter as well, pre-tax earnings would have been about $400 million lower. Pay is settled at year-end, so the fourth quarter's figure will show where the full-year ratio lands.

Per-share growth was ahead of profit growth. Net earnings to common shareholders rose 33% to $5.12 billion. EPS rose 39% because the diluted share count fell 4.4% to 301.1 million over the year. In the quarter, Goldman bought back 2.9 million shares at an average $1,048.73. Lower preferred dividends ($172 million against $238 million) added a little more.

The tax rate no longer flatters the quarter. The third-quarter tax rate was 24.4% (1,709 ÷ 7,003), similar to 24.0% a year earlier. The nine-month rate of 20.4% still includes about $975 million of tax benefits from employee share awards. The release says these added about $3.20 to nine-month EPS, mostly in the first half. When comparing 2026 earnings with 2025, keep in mind that those year-to-date figures are boosted by this benefit.

One-off swings went both ways. Three items hurt: the Apple Card markdowns, the debt-investment markdowns in Investments, and a $368 million credit provision. The provision was up from $102 million in the second quarter and was "primarily" for "impairments related to wholesale loans", meaning corporate lending. Two items helped: $587 million of incentive fees, which arrive in lumps when funds distribute, and litigation provisions of just $23 million against $131 million a year earlier. Charitable giving to Goldman Sachs Gives made "other expenses" "significantly higher", up 24% year on year and nearly doubled from the second quarter.

Costs tied to trading volume rose fastest. Transaction-based expenses, such as exchange and clearing fees, rose 54% to $3.02 billion, faster than revenue. These scale with trading activity, which fits the volume-driven Equities gain. They cut into the margin on each extra dollar of trading revenue.

What the release doesn't show. Earnings releases carry no cash flow statement, so cash conversion can't be checked until the 10-Q. Goldman's GAAP figures aren't accompanied by an adjusted EPS, so there is no GAAP-versus-adjusted gap to reconcile.

Did last time's read hold up?

Our second-quarter report named two things to watch. First, whether Equities financing would hold near $3.3 billion if markets cooled. It did, rising to $3.37 billion even as Equities trading with clients fell 26% from the second quarter. Second, whether a lower debt underwriting backlog would show up as weaker leveraged-finance fees. Debt underwriting did fall 12% from the second quarter, but it was still up 15% on a year ago, helped by investment-grade deals. On taxes, management had guided to about 20% for the full year and the first half came in at 18.5%, so we expected the second half above 20%. The third quarter came in at 24.4%. We also said buybacks would depend more on new earnings than on surplus capital. The 0.5-point fall in the CET1 ratio after a $3.00 billion buyback supports that.

Takeaway: The quarter rested on two supports: hedge-fund borrowing in prime financing and a light quarterly pay accrual. The first looks durable. Equities financing grew even as client trading fell 26% from Q2, so about $3.4 billion a quarter now looks like a sturdier base than we assumed in Q2. The second may reverse at year-end. With the CET1 ratio now at 12.4%, future buybacks will have to come from new earnings rather than from capital already built up.

Outlook

Goldman gives no revenue or earnings guidance. The release does carry some forward-looking indicators:

• Deal pipeline. The investment banking fees backlog "decreased compared with the end of the second quarter of 2026 and decreased slightly compared with the end of 2025". This quarter's 18% Advisory growth came from deals that closed. A smaller pipeline points to slower fee growth from here, though the release doesn't say which products shrank.
• Capital. The CET1 ratio fell to 12.4% as risk-weighted assets rose to $817 billion from $791 billion. In our second-quarter report, the requirement was 11.4% and management targeted a buffer of 50–100 basis points (0.5–1.0 percentage point) above it. If the requirement is unchanged, the buffer is now about 1.0 point, the top of that range. That leaves little room to keep buying back $3 billion a quarter unless earnings stay this high or risk-weighted assets shrink.
• Asset management. Assets under supervision reached $4.10 trillion, with $97 billion of long-term net inflows in the quarter, partly offset by $27 billion of market declines. That supports management-fee growth. Incentive fees and Investments results are lumpy and shouldn't be extrapolated.
• Dividend. $5.00 per share, payable December 30.

Our read: With the financing businesses holding up, Goldman's results look less tied to rising markets than they did after Q2. Trading with clients (intermediation) and underwriting fell from the second quarter, while financing did not. Three things to watch in the fourth quarter. Does Equities financing stay above $3 billion? Does the year-end pay true-up undo some of the third quarter's 27.4% compensation ratio? Do the wholesale-loan impairments behind the $368 million provision recur? After the second quarter, Goldman cited 15%–17% as its through-the-cycle ROTE target. Annualized ROE was 18.7% for the quarter and 20.7% for nine months. ROE runs below ROTE, because ROTE leaves goodwill out of the equity it divides by, so both are above that target. In a weaker market, returns in the target range are the more realistic expectation.

Next report: Goldman's full 10-Q for the third quarter is expected around October 30, 2026 (our estimate from past filing dates). We will update this analysis if it changes a figure or adds something material.