Goldman Sachs profit falls two percent as trading revenue drops
Goldman Sachs third-quarter profit fell 2 percent as weak bond-trading volumes hit revenue in its biggest business, pushing down the bank's shares in premarket trade.
Revenue from Goldman's fixed income, currency and commodities business, which undertakes trading for clients, fell 44 percent to $1.25 billion in the quarter ended Sept. 30.
The fifth-largest U.S. bank by assets reported a profit of $1.43 billion, or $2.88 per share, beating the average analyst estimate of $2.43, according to Thomson Reuters I/B/E/S.
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In the year-earlier period, the bank earned $1.46 billion, or $2.85 per share.
Goldman's shares fell 2.5 percent to $158.23 in pre-market trading despite the stronger-than-expected earnings and an increase in quarterly dividend to 55 cents per share from 50.
"The third quarter's results reflected a period of slow client activity," Chairman and Chief Executive Lloyd Blankfein said in a statement.
Fixed-income trading was muted for several weeks leading up to the Federal Reserve's meeting in mid-September amid speculation that the central bank was about to start winding down its bond-buying stimulus program.
Goldman was not the only Wall Street bank to be stung by weak fixed-income trading. However, it is more reliant on trading income than its bigger rivals, which have significant consumer banking operations.
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Revenue from Goldman's own investments also fell. Revenue from loans and principal investments slid 18 percent to $1.48 billion.
Equity trading revenue dropped 18 percent to $1.62 billion, while investment banking advisory revenue slid 17 percent to $423 million.
However, underwriting revenue rose 13 percent $743 million.
Goldman Sachs shares traded lower immediately following the report. (Click here to track the company's shares in pre-market trade.)
"The third quarter's results reflected a period of slow client activity," Lloyd Blankfein, chairman and CEO, said in a statement. "As longer-term U.S. budget issues are resolved, we could see an improvement in corporate and investor sentiment that would help lay the basis for a more sustained recovery."