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.

The Goldman Sachs booth on the floor of the New York Stock Exchange
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The Goldman Sachs booth on the floor of the New York Stock Exchange

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.