New York: Goldman Sachs Group Inc, once the most profitable firm on Wall Street, reported a 47 per cent increase in third-quarter earnings as revenue from bond trading surpassed analysts’ predictions.

Net income rose to $2.09 billion (Dh7.67 billion), or $4.88 a share, from $1.43 billion, or $2.90, a year earlier, the New York-based company said in a statement Tuesday.

Chief Executive Officer Lloyd Blankfein, 62, has cut jobs, given responsibility to more junior employees and lowered compensation to reduce expenses and preserve flexibility to ramp up trading when activity returned. This quarter shows the benefit of the strategy, which attracted some skepticism among analysts as competitors such as Morgan Stanley decided to retreat instead.

“We saw solid performance across the franchise that helped counter typical seasonal weakness,” Blankfein said in the statement.

Fixed-income trading revenue rose to $1.96 billion, beating the $1.7 billion estimate of five analysts surveyed by Bloomberg. Equities-trading revenue of $1.78 billion surpassed the $1.69 billion estimate. The sales-and-trading division is overseen by Isabelle Ealet, Pablo Salame and Ashok Varadhan.

The bank is battling sluggish revenue prospects and trying to show investors it can generate a return on equity above its cost of capital after years of returns often in excess of 20 per cent were the envy of the industry.

Goldman Sachs enacted at least four rounds of job reductions in New York this year that accounted for more than 400 dismissals. It also extended cuts in its fixed-income division to roughly 10 per cent of staff, double what it normally culls each year, and eliminated dozens of managing directors, executive directors and vice presidents across the mergers and debt and equity capital-markets teams.

Asia jobs

In recent weeks, Goldman Sachs has reduced its projection for job cuts in Asia. The firm now intends to trim about 15 percent of its investment-banking jobs in Asia outside Japan, fewer than the 25 per cent, or 75 positions, initially considered last month, a person with knowledge of the matter said Monday.

The company has also sought to develop new businesses to help generate revenue and boost returns. The bank this month began offering loans through its online-lending platform Marcus by Goldman Sachs, which offers unsecured consumer loans to creditworthy borrowers. It also has an online deposit-taking franchise that it purchased from General Electric Co. this year. Consumers can open a savings account there with as little as $1.

Goldman Sachs’s stock slumped 6.2 per cent this year through Monday, lagging behind the 0.2 per cent drop for the S&P 500 Financials Index.

Goldman Sachs is the fifth of the six biggest US banks to report results, with Morgan Stanley set to announce earnings on Wednesday. JPMorgan Chase & Co. kicked off the US financial industry’s earnings season Friday, topping analysts’ profit estimates on a 48 per cent surge in fixed-income trading. Citigroup Inc. and Bank of America Corp. surpassed predictions, too, as fixed-income revenue jumped 35 per cent and 39 per cent, respectively. Wells Fargo & Co, contending with a scandal in its consumer business, also beat estimates.