Goldman's profit falls

Wednesday, July 18, 2012    

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NEW YORK - Goldman Sachs says its net income fell 11 per cent in the April-June period after the investment bank's clients made fewer deals and avoided volatility in global financial markets.

The New York bank said its net income fell to US$962 million ($85.2 billion), or US$1.78 per share, for the quarter. That compares with US$1.09 billion, or US$1.85 per share, a year ago. It's also far more than the US$1.17 per share that analysts were expecting.

"During the second quarter, market conditions deteriorated and activity levels for both corporate and investing clients were lower given continued instability in Europe and concerns about global growth," Goldman's CEO, Lloyd Blankfein, said in a statement.

Revenue for the three months ended June 30 declined nine per cent to US$6.63 billion. That was more than Wall Street's forecast of US$6.2 billion.

Goldman Sachs' stock climbed US$2.50 to US$100.18 in premarket trading.

Goldman is also keeping its compensation costs in line. The bank has been targeted by protesters and Congress for outsized pay in years past. Goldman's compensation costs fell 9 percent in the quarter to US$2.9 billion, in line with the drop in revenue.

Global financial markets reeled in the second quarter after the outcome of elections in Greece seemed to push the country closer to defaulting on its debt and as Spain's banks teetered on the brink of collapse — the latest threats to Europe's currency union.

The shakiness in financial markets hurt Goldman's core investment banking business. Goldman is a major adviser to large companies on making merger and acquisition deals and on underwriting stock and bond offerings. Many companies shied away from doing both in the second quarter as they waited for calmer markets.



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