Goldman Sachs (GS) Q3 2026 earnings review
Goldman sets a financing record, but its deal backlog shrinks
Goldman Sachs, the Wall Street investment bank, earned less than in spring, but its steadier businesses set records. Revenue fell 8% from the second quarter to $18.7 billion. Income from financing investors' positions and fees for managing client money both reached records. Chief executive David Solomon described "a complicated operating environment", yet profit per share rose 39% from a year ago.
| Revenue | $18.68B +23% from a year ago; −8% from last quarter |
|---|---|
| Profit per share | $17.01 +39% from a year ago |
| Return on equity, annualized | 18.7% 23.5% last quarter |
| Outlook | Dividend held at $5.00 no revenue or profit outlook given |
⚖️ Verdict: ⚪ Neutral
The story is unchanged, because the quarter confirmed both halves of it. Lending to investors and asset-management fees kept growing while trading revenue dropped. One caution: Goldman said its backlog of pending deals decreased, and a key capital ratio slipped to 12.4%.
The question now is whether the spring quarter was the peak for deal-making and trading. If it was, the smaller backlog leads to lower banking fees; if not, record merger advice keeps refilling it. The fourth-quarter backlog and investment banking fees will tell.
🐂 Bull Case
Financing Set a Record While Client Trading Fell
Goldman earns money from stock investors in two ways. It trades for them, which it calls intermediation, and it lends them money and securities, which it calls financing. Financing income follows the balances clients borrow, while trading income follows how active markets are.
This quarter equities financing set a record, and Goldman said "prime financing and portfolio financing" drove it. Trading for clients dropped from the spring, so financing became the bigger of the two businesses.
- Equities financing revenue: $3.37 billion, up 96% from a year ago
- Equities trading for clients: $3.08 billion, down 26% from last quarter
- Financing share of stock and bond desk revenue: 46%, against 37% last quarter, by our math
This matters because the worry about Goldman is that its record spring rested on hectic markets. Financing kept growing after trading eased, so part of the revenue rests on client balances. But investors borrow less when share markets fall.
What to watch: equities financing revenue in the fourth quarter, due in January. Another record would show that client borrowing, not market activity, now sets this income.
Fees for Managing Client Money Reached a Record
Goldman charges fees on assets under supervision (AUS), the client money it manages or advises on. Those fees reached a record this quarter, and the firm said higher average AUS was the main reason.
- Management and other fees: $3.59 billion, up 22% from a year ago
- Long-term net inflows: $97 billion, against $56 billion a year ago
- Incentive fees: $587 million, against $112 million last quarter
Clients added money for a 35th straight quarter, so fee growth did not depend on markets, which cut AUS by $27 billion. Incentive fees, Goldman's share of fund profits, jumped because funds paid out to investors, and that income is irregular.
What to watch: management and other fees next quarter. Growth near this quarter's pace while markets stay flat would show that inflows alone can carry the fees.
Alternatives Fundraising Nears the Full-Year Target Early
Alternatives are investments outside public stocks and bonds, such as private company stakes, private credit, real estate and hedge funds. Goldman raises money for them from outside investors.
- Money raised this quarter: $37 billion, including $16 billion for credit funds
- Money raised this year: $122 billion, against a July target of more than $125 billion
- Management fees from alternatives: $860 million, up 43% from a year ago
By our math, the firm needs only about $3 billion in the fourth quarter to pass the target it set in July. Alternatives under supervision reached a record $491 billion, and fees grew faster than those assets did.
What to watch: fourth-quarter fundraising, and whether Goldman sets a 2027 target in January. A total well above $125 billion would show the July target was cautious.
Positives this quarter didn't test
Three standing positives got no real test in these results, because the release gives rankings and payouts but not the detail behind them.
- Merger advice: Goldman ranked first in announced and completed deals for nine months; next quarter's backlog will show whether new mandates replace the completed ones.
- Spending on AI infrastructure as a source of financing work: the release does not mention it; a figure for AI-related debt deals would move the case.
- Shareholder payouts: the board kept the dividend at $5.00 a share; its next change will show how much capital the board considers spare.
🐻 Bear Case
The Deal Backlog Shrank and Client Trading Fell
Chief executive David Solomon said clients "continued to turn to Goldman Sachs" this quarter. He added that the bank remains "very well positioned to continue to deliver for our clients".
Goldman's backlog is its estimate of fees from deals it expects to complete. The bank said the backlog "decreased compared with the end of the second quarter of 2026 and decreased slightly compared with the end of 2025". Advisory led the drop, in the same quarter that advisory fees set a record.
- Investment banking fees: $3.22 billion, down 5% from last quarter
- Trading for clients in stocks, bonds, currencies and commodities: $5.34 billion, down 29% from last quarter by our math
Completed deals turned backlog into record advisory fees this quarter, and new mandates did not fully replace them. Trading and the backlog both shrank, so Solomon's claim now rests on financing and asset management. One decline from a record does not prove a turn.
What to watch: the backlog comment in January's release. A second straight decrease would mean the deal-making peak has passed and banking fees will follow the backlog down.
Risk Grew Faster Than Goldman's Capital
Regulators measure a bank's safety with the common equity tier 1 (CET1) ratio, its core capital divided by assets weighted for risk. Goldman's ratio under the standardized rules dropped this quarter, and the firm cited "an increase in market and credit RWAs", meaning risk-weighted assets.
- CET1 ratio, standardized rules: 12.4%, against 14.3% at year-end
- Risk-weighted assets: $817 billion, up $26 billion in three months
Goldman earned $5.1 billion for shareholders and returned $4.49 billion of it, so capital stood still while risk increased. That leaves less room to expand financing, the business that set this quarter's record.
What to watch: the standardized CET1 ratio in January and any change to Goldman's capital requirement. Another drop without a lower requirement would force a choice between buybacks and lending growth.
Wholesale Loan Write-Downs Lifted Credit Costs
A provision for credit losses is money a bank sets aside for loans it may not recover. Goldman's charge more than tripled from the second quarter. The firm said it "primarily reflected impairments related to wholesale loans", meaning loans to companies and institutions.
- Provision for credit losses: $368 million, against $102 million last quarter
- Share of revenue: 2.0%, up 1.5 percentage points from last quarter by our math
- Loans backed by other collateral: $113 billion, up 26% from a year ago
A year ago credit cards drove the charge; now loans to businesses and funds do, and that lending keeps expanding. The asset management arm also took "net markdowns in debt investments".
What to watch: the provision and the write-off rate in January. A second quarter of wholesale write-downs would show a pattern in the loan book, not a single bad credit.
Risks this quarter didn't answer
Five standing concerns got little or no new information in the release and the slides, so each stays where it was three months ago.
- Apple Card exit: markdowns on the card loans left Platform Solutions, the consumer unit, with a $95 million pre-tax loss; the sale's closing would end them.
- Private banking and lending: revenue of $827 million rose 20% from last quarter; the deposit margin in the quarterly filing would settle the margin question.
- Legal exposure: the release gives a $23 million litigation charge and nothing on the disputed payment tied to Malaysia's 1MDB fund; the filing will.
- One Goldman Sachs 3.0, the AI-driven efficiency programme: still no savings figure; any published target would move it.
- War and tariffs: the firm's risk language still names "the continuation or worsening of the conflict in the Middle East"; no figure ties it to revenue.
👓 Other Themes
Solomon Calls the Operating Environment Complicated
Chief executive David Solomon described "a complicated operating environment" and "the current complexity and uncertainty in the world". The slides show one effect: bond prices fell enough to outweigh stock gains in client portfolios. Currencies and commodities trading earned significantly more, while trading in mortgages, credit and interest rates earned less.
💲 Other KPIs
Loans grew faster: up 24% from a year ago by our math, after about 20% in each of the two prior quarters. Goldman added $15 billion in three months across corporate, property and securities-backed lending. Net interest income still slipped 2% from a year ago, to $3.77 billion.
The efficiency ratio is operating costs as a share of revenue, so a smaller figure is better. It worsened to 60.5% from 57.4% last quarter. Pay dropped to 27.4% of revenue by our math, but a charitable gift of about $450 million added 2.4 points.
Book value per share, the accounting worth of each share, rose 1.4% in the quarter and 5.3% from a year ago by our math. Growth has run between 1% and 2% a quarter this year, because Goldman pays out most of its profit.
Goldman's share count keeps shrinking: down 4.4% from a year ago by our math, after buybacks of 2.9 million shares this quarter. Fewer shares explain part of the gap between profit per share, up 39%, and total profit, up 29%.
🔮 Guidance
New. The board declared $5.00 a share for the fourth quarter, payable December 30, the same amount as the third-quarter payout. That is 25% above the $4.00 paid a year earlier, after two raises this year. Goldman gave no revenue or profit outlook in the release.
❓ Key Questions
How much did the deal backlog fall, and where?
Goldman said the backlog decreased and that advisory drove it, but gave no figure. The size of the drop, and whether underwriting also fell, decides how far banking fees can decline from here.
Which wholesale loans did Goldman write down?
The provision more than tripled from last quarter on wholesale impairments. One borrower or several, and which lending category, tells investors whether this is a single event or a wider problem.
What capital ratio will Goldman not go below?
The standardized capital ratio has dropped from 14.3% to 12.4% in nine months while the firm returned $4.49 billion this quarter. Investors need the floor to judge how much lending growth remains.
Does the full-year fundraising target still stand?
Goldman has raised $122 billion in alternatives against a July target of more than $125 billion. The release does not repeat the target, the full-year tax rate, or any 2027 plan.
What will NEOS Investments and LCN Capital Partners add?
The firm announced agreements to buy both during the quarter. The materials give no price, no client assets and no closing date, so their effect on fees and capital is unknown.