Goldman Sachs Group today said quarterly earnings fell 11 per cent as turmoil in financial markets hit trading and slowed investment banking, yet the firm once again exceeded expectations by avoiding major losses.
Net income at the largest US investment bank fell to $2.09 billion, or $4.58 a share, in the second quarter ended May 31st, from $2.33 billion, or $4.93 a share, a year earlier.
Net revenue fell 7 per cent to $9.42 billion during a period that included the March panic that fuelled the collapse of Bear Stearns.
Analysts on average had expected Goldman to earn $3.42 a share, according to Reuters Estimates.
"They benefited from the disruption at the other investment banks. In tough times, people tend to gravitate toward the stronger financial firms." said Rose Grant, who helps manage $2 billion for Boston's Eastern Investment Advisors.
A breakdown in credit in mortgage markets last year continues to slam banks and securities firms worldwide, forcing financial institutions to write down more than $400 billion of assets. The lack of easy credit, meanwhile, dried up the well of buyouts and public offerings.
Lehman Brothers Holdings yesterday reported a quarterly loss of $2.8 billion, fuelled by fixed-income trading and hedging losses, a week after replacing its president and its chief financial officer.
Goldman largely avoided the massive losses that have humbled its rivals, though its business overall slowed from last year's record levels.
Goldman's second-quarter trading and principal investments revenue fell 16 percent from a year earlier to $5.59 billion but was up 9 per cent from the first quarter.
Investment banking revenue fell 2 per cent from a year earlier to $1.69 billion, but its mergers and acquisitions business grew.
Since June 11th, Goldman shares have surged 12 per cent. They are down 15 per cent this year, outperforming a 20 per cent drop in the Amex Securities Broker Dealer index.