Following strong earnings from Morgan Stanley earlier this morning, which without a balance sheet (with rising credit loss provisions) to drag it down, reported solid, and better than expected trading and wealth management revenues, all eyes were on Goldman. And after last quarter's abysmal report, which saw FICC revenue tumble 40% in Q2, Goldman Sachs did not disappoint, reporting Q2 revenue of $8.326BN, above the $7.54BN expected, and 2% higher from the $8.168BN reported a year ago. This was also the highest quarterly revenue reported by the bank since Q2 2015, when the company generated revenues of $9.1 Billion. Goldman's EPS of $5.02 was also above the $4.17 expected, although there was just one number that interested investors: the company's FICC trading which at $1.452BN came in stronger than the $1.37BN expected, although it was still a 26% drop from the $1.964BN reported last year. Less impressive was Goldman's equity sales and trading, which dropped 7% Y/Y to $1.668BN, and missed expectations of a $1.70BN. However, this was more than offset by the surge in Goldman Investing and Lending (Prop) which jumped 35% Y/Y to $1.883 billion. Breaking down the key revenue segments: 3Q trading rev. $3.13 billion, est. $3.04 billion 3Q FICC sales & trading revenue $1.452 billion, est. $1.37 billion 3Q equities sales & trading revenue $1.668 billion, est. $1.70 billion 3Q investment banking revenue $1.80 billion, est. $1.50 billion 3Q Investing and Lending (Prop): $1.883BN, up 35% Y/Y Discussing the ongoing weakness in FICC, Goldman explained that "net revenues in Fixed Income, Currency and Commodities Client Execution were $1.45 billion for the third quarter of 2017, 26% lower than the third quarter of 2016, due to significantly lower net revenues in commodities, interest rate products and credit products and lower net revenues in currencies, partially offset by higher net revenues in mortgages. Although market-making conditions improved in most businesses compared with the second quarter of 2017, Fixed Income, Currency and Commodities Client Execution continued to operate in a challenging environment characterized by low levels of volatility and low client activity." And while equities trading was mildly disappointing, it came largely in line with historical. Goldman noted that "net revenues in Equities were $1.67 billion for the third quarter of 2017, 7% lower than the third quarter of 2016, primarily due to lower net revenues in equities client execution, reflecting significantly lower results in derivatives, partially offset by higher results in cash products. Net revenues from commissions and fees were lower, reflecting lower market volumes in the United States, and net revenues in securities services were slightly higher compared with the third quarter of 2016. Equities operated in an environment characterized by higher global equity prices compared with the second quarter of 2017, while volatility levels remained low. " Goldman als clarified the burst in prop investing and trading as follows: "Net revenues in Investing & Lending were $1.88 billion for the third quarter of 2017, 35% higher than the third quarter of 2016 and 19% higher than the second quarter of 2017. Net revenues in equity securities were $1.39 billion, 51% higher than the third quarter of 2016, reflecting an increase in net gains from investments in private equities, which were positively impacted by corporate performance and company-specific events. Net revenues in debt securities and loans were $492 million, 3% higher than the third quarter of 2016, reflecting higher net interest income, partially offset by lower net gains from investments in debt instruments." Unlike last quarter, Investment Banking revenues finally rebounded, rising 17% year over year, "reflecting an increase in completed mergers and acquisitions. Net revenues in Underwriting were $886 million, essentially unchanged compared with the third quarter of 2016, as slightly higher net revenues in debt underwriting, reflecting higher net revenues from investment-grade activity, were largely offset by lower net revenues in equity underwriting, reflecting a decrease in industry-wide offerings." The bank also warned that " the firm’s investment banking transaction backlog decreased compared with both the end of the second quarter of 2017 and the end of 2016." Two other notable highlights: 3Q compensation expenses of $3.172 billion, were higher than the estimate of $2.9 billion, while 3Q non- compensation expense was $2.18 billion. Finally, based on the total headcount of 35,800, up 1,700 from the prior quarter, at the end of the quarter and calculated LTM comp accruals, the average compensation per Goldman banker dropped to $339,190 from $357,126 in Q2.