Goldman Sachs' profits miss forecasts as trading struggled

Paterniano Del Favero
Aprile 19, 2017

Growing investment banking fees helped Goldman Sachs to nearly double its quarterly profit but the Wall Street lender missed analysts' estimates after failing to capitalise on a trading boom.

Total trading revenue, which also includes equities, fell 2 per cent to US$3.36 billion.

Earlier, Goldman Sachs reported first quarter earnings that came up short, missing estimates by a distance.

Net earnings applicable to common shareholders came in at $2.16bn (£1.7bn), up 80 per cent from $1.2bn in the first quarter of a year ago.

"The operating environment was mixed, with client activity challenged in certain market-making businesses and a more attractive backdrop for underwriting in our investment banking franchise", Blankfein pleaded in a written statement. Its revenue rose 27 percent to $8 billion from $6.3 billion. Trading revenues in bonds, currencies and commodities was effectively flat in quarter while trading revenues for stocks were down 6 percent from a year earlier. That also missed analysts' expectations of $8.37 billion. On a conference call with analysts, Goldman's newly appointed finance chief, R. Martin Chavez, said that while markets improved during the quarter, a lack of volatility meant clients were trading less. Citi, Bank of America and JP Morgan on average, 1Q FICC trading results were up about 5 percent versus 2015. Bank of America said earlier Tuesday that its trading revenue climbed, while JPMorgan Chase and Citigroup last week reported revenue from that business exceeded estimates.

Many fixed-income businesses have been bought back to life in recent months, following the surprise Brexit outcome and the unexpected election of Donald Trump as U.S. president. "Goldman was down 46 percent, so you know there is no sugar coating", Kotowski said.

Goldman Sachs's stock dropped $9.88, or 4.4 percent, to $216.36.

Additionally, the revenue in Goldman Sachs investment banking division rose 16% to $1.7 billion. The dividend will be paid on June 29 to common shareholders as of June 1. The stock offerings led the way, up 70% from the same period a year ago.

This is a breaking news story.

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