Goldman Sachs Group's quarterly revenue from financing business to hedge funds surpassed for the first time the trading volume of its equity department, due to large investors further leveraging up in a highly volatile market.
On Tuesday, this major Wall Street firm announced that its stock financing revenue in the third fiscal quarter amounted to $3.37 billion, a significant increase of 96% year-on-year. The business income from Goldman Sachs traders acting as intermediaries to match buyers and sellers of stocks amounted to $3.08 billion, representing a growth of 52%.
The so-called "principal brokerage business" refers to the services provided by banks to funds, such as financing, custody, and matching funds with investors. The rise of this business has become a key driver of growth in stock revenues. This year, high-leverage funds have frequently made headlines, as volatility, especially the fluctuations in technology stocks, has led to a significant increase in trading revenues.
Goldman Sachs' stock income made up for the disappointing fixed-income business results of that quarter. The bank separates intermediary and financing income when reporting its performance, which is different from other institutions.
It has always been ahead of other banks in stock business. The $6.44 billion in stock revenue announced on Tuesday set a new record, becoming the second-highest in its history.
