[ by Howard Haykin ]

Some Disappointed, Following Strength of Recent Reports from JPMorgan, Citi. 

Goldman Sachs Group turned up the volume with higher-than-expected Q3 earnings on revenues that more than doubled - net revenue rose to $8.35 billion from $3.6 billion.  Tuesday's announcement indicated that Goldman had big gains on stocks and bonds that the firm held as investments.

However, return on equity ... a measure of how the company wrings profit from its balance sheet - remained in a single-digit percentage range, and investment banking and trading results showed signs of weak client activity.  That figure came in at 8.6% for the quarter - higher than the previous period, which generated a 5.4% return - though both numbers well below the typical 15% that investors look for at investment banks in better market environments.

Goldman also announced that its dividend would be increased - 50 cents per share from 46 cents - the second increase in a year.  That announcement comes as a surprise, given that Goldman has, in the past, said it would prefer to use capital to invest in businesses.  The firm also spent $1.25 billion buying back stock during the quarter.

Mixed Reactions. Notwithstanding the fact that Goldman bested the consensus of analysts, some analysts and investors say they had been expecting an even bigger earnings beat - given strong results at investment banking divisions of JPMorgan Chase and Citigroup in recent days.  "The bar had been raised," said Ratel Capital Management analyst Mitchell Protass.

CEO Lloyd Blankfein described the bank's Q3 performance as "generally solid in the context of a still challenging economic environment."     [ Reuters, 10/16/12 ]