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Goldman Sachs’s Profit and Revenue Tumble in Quarter Goldman Sachs’s Profit and Revenue Tumble in Quarter
(about 5 hours later)
Goldman Sachs had its worst quarter in more than four years as volatile markets hit nearly all of the firm’s business lines. Goldman Sachs had its worst quarter in more than four years as volatile markets hit nearly all of the company’s business lines.
In results announced on Tuesday morning, Goldman said that its revenue in the first three months of the year declined 40 percent from the same period a year earlier. Its profit was down even more sharply.In results announced on Tuesday morning, Goldman said that its revenue in the first three months of the year declined 40 percent from the same period a year earlier. Its profit was down even more sharply.
The firm earned $1.1 billion, or $2.68 a share, down 55 percent from the same period a year earlier. Analysts polled by Thomson Reuters had been expecting earnings of $2.45 a share. Some analysts said that including certain one-time items, Goldman did worse than they expected. The company earned $1.1 billion, or $2.68 a share, down 55 percent from the year-earlier period. Analysts polled by Thomson Reuters expected earnings of $2.45 a share. Some analysts said that when certain one-time items were included, Goldman did worse than they had expected.
In early trading on Tuesday, shares of Goldman were up 0.8 percent. In recent years, Goldman’s revenue and profit have suffered as volatile markets and increased regulations have crimped the trading and investing businesses where the company is most focused. After the latest disappointing results, the company faced sharp questions about its business prospects from several analysts.
Goldman is the last of the large Wall Street banks to announce its first-quarter financial results. The other banks were also buffeted by tumultuous financial markets, but because Goldman is so focused on trading, it had particularly weak results. “When does Goldman say the time has come for transformational change — that, ‘We must do something radically different because we’re getting nowhere’?” a banking analyst, Richard X. Bove, asked Goldman Sachs executives on a conference call with the bank’s executives on Tuesday morning.
Goldman has argued that it maintains a diversified array of Wall Street businesses so that when one division is struggling, another can carry the load. But in the latest quarter, revenue in nearly every business fell sharply.Goldman has argued that it maintains a diversified array of Wall Street businesses so that when one division is struggling, another can carry the load. But in the latest quarter, revenue in nearly every business fell sharply.
“The operating environment this quarter presented a broad range of challenges, resulting in headwinds across virtually every one of our businesses,” the firm’s chief executive, Lloyd C. Blankfein, said in a statement. Goldman’s chief financial officer, Harvey M. Schwartz, defended the company’s approach on Tuesday – and suggested that analysts not focus too much on one quarter, particularly one in which there were many unanticipated shocks, such as the declining price of oil and the unstable outlook for interest rates.
But Mr. Schwartz also argued that the bank has been cutting employees and expenses to deal with the difficult environment.
“This has been — and I admit it – this has been a tough period,” he said. “But we have a long history of managing our business across the cycle.”
Investors appeared to give Goldman the benefit of the doubt on Tuesday. The bank’s stock was up more than 2 percent in afternoon trading.
Goldman is the last of the large Wall Street banks to announce its first-quarter financial results. The other banks were also buffeted by tumultuous financial markets, but because Goldman is so focused on trading, it had particularly weak results.
As has frequently been the case over the last few years, Goldman’s trading desks were hit hard by the global economic uncertainty, which has whipsawed financial markets. At the fixed-income trading desks, which used to provide a large chunk of the bank’s earnings, revenue dropped 47 percent from a year ago.As has frequently been the case over the last few years, Goldman’s trading desks were hit hard by the global economic uncertainty, which has whipsawed financial markets. At the fixed-income trading desks, which used to provide a large chunk of the bank’s earnings, revenue dropped 47 percent from a year ago.
In the last year, the firm’s equities trading desks, where stocks are traded, have been a bright spot. But revenue there also fell 58 percent. In the last year, the company’s equities trading desks, where stocks are traded, have been a bright spot. But revenue there also fell 58 percent.
Goldman sharply lowered the amount of money that it put aside for bonuses and salaries, in line with the declining revenue.Goldman sharply lowered the amount of money that it put aside for bonuses and salaries, in line with the declining revenue.