Goldman Sachs (GS) beat analyst estimates with third quarter profits of $1.5 billion, but investors remain wary of the investment bank’s future outlook. Even with decreased investment volumes Goldman Sachs was able to report earnings per share of $2.85, compared to earnings of $1.78 last quarter and a loss of $.84 in the third quarter of 2011. Revenues have increased in recent quarters but have been partly offset by similarly large expenses.

Goldman Sachs received higher than expected profits resulting from its mortgage lending and capital underwriting departments performing well. Record low borrowing costs in the market encouraged capital financing during the third quarter, creating $655 million in revenues for the bank’s underwriting department, a record high. This is more than double its underwriting revenue from the comparable quarter of last year, and is by far the industry leader. Total revenue from investing and lending was $1.8 billion; up from a loss of $2.4 billion last year because of tighter credit spreads and increased equity markets.

Expenses associated with these operations and others for the bank have surged in the third quarter to total $6.1 billion, 40% higher than last year. This has come with a sense of anger from some shareholders as compensation expenses more than doubled for the period, even though the number of employees decreased.

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