Goldman Sachs yesterday demonstrated its skill at navigating turbulent capital markets, reporting a 79 per cent surge in third-quarter net income even as rival Bear Stearns recorded a 61 per cent profit plunge in the wake of the summer's credit squeeze.

Goldman's performance was driven in part by an early bet against US mortgages, which more than offset losses on the value of existing leveraged loan commitments and mortgage-related positions. The bet helped Goldman generate record net revenue of $4.89 billion in its fixed income, currency and commodities businesses.

Bear Stearns, by contrast, reported a near 90 per cent drop to $118 million in net revenue in its fixed income businesses.Goldman also gained $900 million from the sale of its Horizon Wind Energy business and an increase of $300 million from the reduction in value of some of its outstanding debt. Goldman's return on tangible equity rose from 31.6 per cent to 36.6 per cent.