Goldman Sachs Group Inc. today reported strong results for the third quarter, but the company’s revenue and earnings growth slowed from the first half of the year as market conditions grew more challenging.

For the quarter ended August 25, 2006, the Wall Street financial firm said it earned US$1.59 billion, or $3.26 a share, which includes non-cash expenses related to share-based awards. It represents a 1% decline from US$1.62 billion, or $3.25 a share, at this time a year ago. Revenue increased by 2% to US$7.46 billion.

“We are pleased to be reporting the third best revenue quarter in our history,” said Lloyd Blankfein, chairman and CEO. “This is particularly noteworthy given our record performance for the first half of the year. While market conditions were more challenging this quarter, our results underscore the strength and depth of our client franchise.”

Net revenues in Investment Banking were US$1.29 billion, 27% higher than the third quarter of 2005 and 16% lower than the second quarter of 2006. Net revenues in Financial Advisory were US$609 million, 9% higher than the third quarter of 2005, reflecting increased client activity. Net revenues in the firm’s Underwriting business were US$679 million, 49% higher than the third quarter of 2005. “Net revenues were significantly higher in debt underwriting, primarily due to an increase in leveraged finance activity, and in equity underwriting,” it noted.

Trading and Principal Investments generated revenues of US$4.72 billion, 7% lower than the third quarter of 2005 and 32% lower than a particularly strong second quarter of 2006.

In the fixed income and commodities area, net revenues were US$2.74 billion, 4% higher than the third quarter of 2005, reflecting higher net revenues in commodities and mortgages, partially offset by lower net revenues in currencies.

Net revenues in Equities were US$1.55 billion, 3% lower than the third quarter of 2005, primarily reflecting significantly lower net revenues in principal strategies and, to a lesser extent, shares. “These declines were partially offset by higher net revenues in derivatives and the contribution from the firm’s insurance business, which was acquired in 2006,” it explained. “During the quarter, Equities operated in an environment in which equity prices lacked direction and customer-driven activity declined from the first half of the year.”

Net revenues in Asset Management and Securities Services were US$1.46 billion, 20% higher than the third quarter of 2005 and 10% lower than the second quarter of 2006. The increase in asset management revenues was primarily driven by significantly higher management and other fees, principally due to growth in assets under management.

During the quarter, assets under management increased 6% to US$629 billion, reflecting non-money market net asset inflows of US$27 billion, principally in alternative investment and fixed income assets, money market net asset inflows of US$3 billion and market appreciation of US$6 billion, primarily in equity and fixed income assets.