Goldman Sachs Posts Loss as Investment Banking Slides
Goldman Sachsposted a loss that was even worse than expected of 84 cents a share on a 33 percent drop in investment banking revenue from a year ago.
Wall Street had expected the company to post only the second quarterly loss since Goldman went public in 1999, but estimates were for just 16 cents a share in the red.
Shares, though, rebounded from earlier losses after company officials insisted the firm was well-positioned after the economy recovers and financial markets stabilized. Goldman stock rose 1 percent in premarket trading.
Goldman posted $3.59 billion in revenue, a decrease from $8.90 billion a year ago when it posted a profit of $2.98 a share.
Analysts had expected revenue of $4.29 billion.
"CEO and investor confidence as well as asset prices across markets were lower in the third quarter given the uncertain macroeconomic and market conditions," Goldman CEO Lloyd Blankfein said in a statement. "Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter."
Investment banking revenues came in at $781 billion, a one-third fall from the third quarter in 2010 and a 46 percent drop from the previous quarter. Financial advisory revenues were $523 million, up a bit from the same quarter last year.
Goldman's loss-driver was its Investing & Lending division, which holds stocks, bonds, loans and private equity assets as long-term investments.
The division reported negative revenue of $2.48 billion as the value of those assets dropped sharply. Goldman's stock investment in Industrial and Commercial Bank of China alone generated more than $1 billion of paper losses.
Goldman was also hurt by big declines in bond trading and investment banking revenue.
Its fixed income, currency and commodities client trading business reported $1.73 billion in revenue, a 36 percent decline from a year earlier.
—Reuters contributed to this report.