Goldman built 2026 on a bigger balance sheet, and its CFO says the largest part of that extension is behind it

A year of growth built on lending the balance sheet

Goldman Sachs has earned far more this year. Total assets rose about 21% between December and September while shareholders' equity stayed flat, by our arithmetic. September is the release's preliminary, rounded figure. The firm financed much more for clients without adding capital underneath. Equities financing, the line that balance sheet feeds, supplied about $4.2 billion of the $11.4 billion rise in nine-month net revenues, by our arithmetic. Each dollar of equity carried noticeably more assets in September than in December, by our arithmetic.

Earnings per share for the first nine months were well above a year earlier, $55.56 against $37.33; the balance sheet is one part of that. In the September 2026 quarter growth in equities financing slowed to 3%, and the CFO said there was deleveraging in the quarter.

The largest part of the balance-sheet extension is behind it

The chief financial officer put it plainly: "the largest sort of balance sheet extension is behind us". He was speaking of the supplementary leverage ratio, which the release puts at 4.3%, unchanged on the quarter; he said the firm is moving to a zone where it keeps a buffer on it, as it does on core capital. Separately, the core capital ratio was 12.4% at the end of September, down on the quarter. The CFO put the cushion over the 11.4% requirement at 100 basis points, which the CEO said is at the top of the range the firm targets; a quarter earlier the company put it at 150 basis points.

The firm also trimmed its share buyback, and paid a large multiple of book value per share for the shares it bought, by our arithmetic.

Equities financing slowed to 3%; revenue fell on the quarter

Financing is where the balance sheet earns its keep. Equities financing revenue rose only 3% last quarter, after a rise of about 25% the quarter before, by our arithmetic, yet equities financing remains 96% above a year ago. Asked about it, the CFO said "I think there was deleveraging in the quarter."

Total net revenues fell 8% from the quarter before, though they remain well above a year ago. This is a step back, not a slump. The open question is whether the quarter before was the high point of the run.

The backlog: lower in the release, strong on the call

A holder reads the next quarter's investment-banking fees partly from the backlog of agreed but unfinished work. At each of the previous four results calls, management described it as at a multi-year high, except in April when it said the backlog barely moved. This time the release said it decreased from the end of the second quarter and slightly from the end of last year.

On the call, the CEO said "even with exceptionally strong revenue production in the quarter, our backlog remains very robust". Asked whether it had peaked, he declined to say it had. He described the market in May and June as top-decile for capital markets activity and now as top-quartile.

The fees themselves held up: down on the quarter before and up 21% on a year ago, with advisory, which the CFO called a record, doing the work.

What to watch, and where an owner could be hurt

Two things bear on the cushion: the CEO said the firm has capital for an active fourth quarter, and a second charitable gift is coming. The CFO said the firm gave about $450 million in the quarter and expects another meaningful one in the fourth. On the call, no amount was given for the second.

Leverage is the other exposure: with more assets per dollar of equity than in December, a surprise has less room to land. Credit provisions more than tripled from the quarter before, after $315 million in the first quarter, and in each of the three quarters this year the stated cause included impairments on wholesale loans.

Asset management is the counterweight. Management now expects about $150 billion of alternatives fundraising this year, against the far lower yearly range it called sustainable in January. Management attributed the incentive fees to one company's public offering and expects them to stay elevated in the fourth quarter; whether they last beyond that is open.

What we do not know yet

Neither the release nor the call gave the size of the fourth-quarter gift; the next results should show it in expenses.

Companies seldom announce that a run has ended. They go on describing the level, and leave the direction to the filing.