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Goldman Sachs profits fall on continued weak trading | Goldman Sachs profits fall on continued weak trading |
(40 minutes later) | |
Goldman Sachs saw its net earnings in the first three months of 2011 drop 21% from a year ago, to $2.74bn (£1.7bn). | Goldman Sachs saw its net earnings in the first three months of 2011 drop 21% from a year ago, to $2.74bn (£1.7bn). |
The profit fall followed continued weak business at its capital markets unit. | The profit fall followed continued weak business at its capital markets unit. |
Net revenues in Goldman's key division, which makes the bulk of the firm's money trading in bonds, derivatives and stocks, fell 22% from a year ago. | |
Ordinary shareholders saw their share of earnings slump 72% after the Wall Street firm decided to pay out a $1.8bn dividend on preferred stock. | Ordinary shareholders saw their share of earnings slump 72% after the Wall Street firm decided to pay out a $1.8bn dividend on preferred stock. |
The dividend payment related to Goldman's buyback earlier this year of $5bn of preferred stock from Warren Buffett, which the billionaire had originally bought in a rescue deal during the 2008 financial crisis. | |
Net revenues at the broker-dealer - a measure of overall business levels - were down 7% from a year before. | |
Goldman accordingly cut the amount allotted to employee pay by 5% to $5.2bn, or 44% of its net revenues. | |
'Good results' | 'Good results' |
Despite the sharp fall in profits, href="http://www2.goldmansachs.com/our-firm/press/press-releases/current/2011-04-19-q1-results.html" >Goldman's first quarter performance still beat expectations. | |
The results also marked a rebound from the previous quarter, which had seen a 52% year-on-year slump in profits, again due to lacklustre sales and trading business. | |
"These are good results," said Joerg Rahn of German investment firm Marcard, Stein and Co. "Yes, expectations weren't gigantic but they were beat nevertheless." | "These are good results," said Joerg Rahn of German investment firm Marcard, Stein and Co. "Yes, expectations weren't gigantic but they were beat nevertheless." |
The drop-off in debt trading revenues was higher than anticipated, according to Matt McCormick of investment firm Bahl & Gaynor. | The drop-off in debt trading revenues was higher than anticipated, according to Matt McCormick of investment firm Bahl & Gaynor. |
"I expected Goldman Sachs to be the best in class on that issue, but all their other peers seem to be facing the same challenges." | "I expected Goldman Sachs to be the best in class on that issue, but all their other peers seem to be facing the same challenges." |
Meanwhile, the result is expected to steady nerves ahead of the opening bell on the New York Stock Exchange. | Meanwhile, the result is expected to steady nerves ahead of the opening bell on the New York Stock Exchange. |
"Goldman Sachs is a bellwether and these numbers will probably begin to calm some of the fears that the market has been worried about," said Peter Cardillo, economist at Avalon Partners in New York. | "Goldman Sachs is a bellwether and these numbers will probably begin to calm some of the fears that the market has been worried about," said Peter Cardillo, economist at Avalon Partners in New York. |
US stocks fell sharply in early trading on Monday following an announcement by rating agency Standard & Poor's that it was putting a negative outlook on the US government's triple-A credit rating. | |
Meanwhile, another major US financial institution, Bank of New York Mellon, reported net profits of $625m, up 12% from a year ago. | |
Despite the strong showing from its core custody business, the result still fell short of market expectations. |