Goldman Sachs profit plunges as market turmoil hits bond trading

Goldman Sachs Group’s profit plunged for the second quarter in a row as bond trading revenue fell by a third amid market turmoil stemming from concerns about global growth.

Revenue fell in all of the bank’s major businesses except investment banking, which benefited from a surge in takeovers.

The results are the latest example of how the grim trading environment is gutting Wall Street.

Turbulent trading, much stemming from worries about the flow-on effect of China’s cooling economy, was aggravated by uncertainty over the timing of a US interest rate hike.

"We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth," chief executive Lloyd Blankfein said in a statement on Thursday.

Goldman said revenue from fixed-income, currency and commodity (FICC) trading, fell 33 per cent to $1.46 billion (€1.3bn), the biggest year-over-year drop since the third quarter of 2013. Excluding adjustments, revenue would have fallen 27 percent.

Goldman joins JPMorgan Chase, Bank of America and Citigroup in reporting a drop in revenue from bond trading. Both JPMorgan and Bank of America reported 11 per cent declines in FICC revenue, while Citi's revenue from the business fell about 16 per cent.

“Investors sit it out in such a market. They don’t trade,” said Erik Oja, an analyst at S&P Capital IQ.

“Unless such a market rout happens again, I would expect Q4 trading revenues at the banks to improve compared to Q3.”

Reuters