Goldman Sachs earnings trounced on trading woes

October 17 01:31 2015

Rollar-coaster markets in August and September just dinged another big bank: Goldman Sachs, which said revenue in some segments fell a whopping 33% as investors lost confidence and stepped back from trading. The bank said it earned $1.43 billion, or $1.90 a share, on revenues of $6.8 billion, down from last year’s earnings of $2.14 billion, or $4.57 a share, on revenue of $8.4 billion.Sign at Goldman Sachs, 133 Fleet Street

Analysts were expecting the investment bank to post earnings of $1.45 billion, or $2.91 a share, on revenues of $7.1 billion, according to data from FactSet. “We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth,”  said Lloyd Blankfein, the company’s CEO. Last month, the bank revealed that Blankfein has a “highly curable” form of lymphoma, but he is expected to work through his treatment.

Goldman reported a 33% decline in revenue in its fixed-income, currency and commodity trading division, to $1.46 billion. The division “operated in an environment characterized by lower levels of client activity and more challenging market-making conditions,” the company said, referring to volatile markets that pushed some investors to step back from trading those assets. Other areas hit by the poor trading environment included its lending business, including lending against trades. That business was down 60% to $670 million, the bank said.

Investors sent Goldman’s shares down 1.3% in pre-market trading to $177.10 a share, but the stock picked back up during the company’s conference call and recently traded higher to $179.62. “We believe our long-term prospects are quite favorable,” Goldman CFO Harvey Schwartz said in the call. He cited the bank’s gains in investment banking and asset management, and said the bank is working on ways to offset losses from the challenging trading environment.