Goldman Sachs' third quarter: lower profit, but the interest math tells a narrower story
In its 10-Q for the quarter ended September 30, 2026, filed November 2, 2026, Goldman Sachs reported net income of $5.29 billion and diluted earnings per share of $17.01. That is down from $6.63 billion and $20.98 in the second quarter, though up from $4.10 billion and $12.25 in the third quarter of 2025, according to the company's 10-Q for that period. First-quarter net income was $5.63 billion, with diluted EPS of $17.55, per the 10-Q filed May 1, 2026.
The quarter-on-quarter decline is almost entirely a revenue story. Net interest income was a small drag. Non-interest income was the larger one.
From the second-quarter peak to the third quarter
| Reported line item ($ billions) | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|
| Interest and dividend income | 20.64 | 22.05 | 22.79 |
| Interest expense | 17.08 | 18.09 | 19.02 |
| Net interest income | 3.56 | 3.95 | 3.77 |
| Non-interest income | 13.67 | 16.38 | 14.91 |
| Non-interest expense | 10.43 | 11.67 | 11.31 |
| Provision for credit losses | 0.32 | 0.10 | 0.37 |
| Income before income taxes | 6.49 | 8.56 | 7.00 |
| Income tax expense | 0.86 | 1.94 | 1.71 |
| Net income | 5.63 | 6.63 | 5.29 |
Between the second and third quarters, non-interest income fell by about $1.48 billion, from $16.38 billion to $14.91 billion. That single line accounts for most of the roughly $1.66 billion drop in net revenue, which fell from about $20.34 billion to $18.68 billion when net interest income and non-interest income are combined.
The company's cost base moved the other way. Non-interest expense fell by about $0.37 billion, to $11.31 billion. The provision for credit losses rose by about $0.27 billion, to $0.37 billion, after a very small charge in the second quarter. Together these took income before taxes from $8.56 billion to $7.00 billion, a decline of about $1.56 billion.
The reported line items show where the change came from, but they do not by themselves explain why non-interest income fell. The company's 2025 annual report, which is the most recent MD&A summary in the material reviewed, described the trading and investment banking mix and the Apple Card transition as the main variables. It does not include explanations of the 2026 quarterly movements, so this article does not attribute a cause to the third-quarter decline.
Net interest dynamics: income up, expense up faster
Interest and dividend income rose in each quarter of 2026. It climbed from $20.64 billion in the first quarter to $22.05 billion in the second and $22.79 billion in the third. Interest expense climbed at a similar pace, from $17.08 billion to $18.09 billion and then $19.02 billion.
Because the expense line grew a little faster, net interest income moved the wrong way in the most recent quarter. It rose from $3.56 billion in the first quarter to $3.95 billion in the second, then slipped to $3.77 billion in the third. Over the two quarters, interest income rose by about $2.16 billion while interest expense rose by about $1.94 billion. Net interest income was up only about $0.22 billion in total.
Year over year, the picture is similar. Third-quarter 2025 net interest income was $3.85 billion, according to the company's 10-Q for that period, so the third quarter of 2026 is roughly flat to slightly lower on that line, even though gross interest income is up about $1.97 billion from $20.82 billion. In the company's 2025 annual results, net interest income had reached $13.56 billion, up 68% on lower interest expense. The 2026 quarters show that gross interest flows are rising, but the spread between what the company earns and what it pays is not expanding.
Pre-tax income and the tax line
Income before taxes fell from $8.56 billion in the second quarter to $7.00 billion in the third. Income tax expense fell less in proportion, from $1.94 billion to $1.71 billion. On the reported figures, that is an effective tax rate of about 22.6% in the second quarter and about 24.4% in the third, a derived ratio based on the pre-tax and tax lines above. The first-quarter rate was lower, at about 13% on $0.86 billion of tax expense.
The higher third-quarter rate means that less of the pre-tax decline reached the bottom line than a flat rate would have implied. Net income fell by about $1.33 billion, against a pre-tax decline of about $1.56 billion. The company's 10-Q states the drivers of its tax rate; the figures above do not identify them.
Preferred dividends were modest relative to net income. The company reported $0.17 billion of preferred dividends in the third quarter and $0.23 billion in the second. Net income available to common stockholders was $5.12 billion in the third quarter, against $6.40 billion in the second. Diluted shares fell to about 301 million from about 305 million, which partly offset the lower earnings in the per-share figure.
What the reported figures leave open
The quarter shows a firm whose revenue is still heavily dependent on non-interest income, and whose interest-rate exposure is growing in gross terms without producing much additional net interest income. The provision for credit losses also moved back into positive territory after a near-zero second quarter. The company's 2025 annual report flagged an Apple Card transition expected to take about 24 months and a $2.48 billion reserve release tied to that portfolio, so the provision line is worth tracking as that transition proceeds. The reported figures do not say how much of the third-quarter provision relates to that portfolio.
A reader weighing these numbers should look for the company's own explanation of the non-interest income decline and the net interest margin in the 10-Q's management discussion, which is not reproduced in the material reviewed here.