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Goldman Sachs misses estimates on weak trading, shares drop

Reuters 

By Olivia Oran and Sruthi Shankar

- Group Inc reported earnings that missed expectations on Tuesday as weak trading outweighed gains in other areas, sending its down nearly 3 percent in premarket trading.

The fifth-largest U.S. bank by assets generated its lowest trading in five quarters even as rivals reported gains. It blamed weakness in commodities, currencies, and credit revenue, as well as lower commissions and fees from equities trading.

Overall, Goldman's trading revenue, its biggest contributer to total revenue, dropped 2 percent to $3.36 billion. Equities trading fell 6 percent while fixed income trading was essentially flat, though analysts were more disappointed in that business relative to their expectations.

Goldman's profit rose from a difficult year-ago quarter, with earnings per share of $5.15 versus $2.68 in the first quarter of 2016. But the were well short of analyst forecasts of $5.31 per share, on average, according to Thomson I/B/E/S.

were down 2.8 percent at $219.95 in premarket trading.

"It sounds like they had a tough time navigating ... in 1Q," said Evercore ISI analyst Glenn Schorr. "Isn't good and it happens every once in a while for Goldman, but definitely not the norm."

Goldman's stood in sharp contrast to other big U.S. banks that have reported earnings so far. Bank of America Corp beat expectations on Tuesday due to surge in trading revenue, similar to from JPMorgan Chase & Co and Citigroup Inc last week. Goldman's chief rival Morgan Stanley will report on Wednesday.

has historically relied more on trading than other big banks, but has been trying to shift to more stable businesses like investment management and lending.

In a statement, Chief Executive Lloyd Blankfein described the business environment as "mixed" with client activity "challenged."

from investment banking, investment management and investing and lending all rose in the first quarter, but not enough to offset the sharp decline in trading.

Overall, Goldman's profit rose 80 percent to $2.2 billion from $1.2 billion in the first quarter of 2016, when sliding commodity prices, worries about the Chinese economy and uncertainty about U.S. interest rates led to weak across Its rose 27 percent to $8 billion from $6.3 billion.

The bank's expenses rose just 15 percent and it paid out a smaller share of its to employees. Its closely watched compensation-to-ratio was 41 percent in the first quarter, down from 42 percent a year earlier, but higher than the 38 percent ratio it reported for all of 2016.

(Reporting by Sruthi Shankar in Bengaluru and Olivia Oran in New York; Writing by Lauren Tara LaCapra; Editing by Sriraj Kalluvila and Meredith Mazzilli)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Goldman Sachs misses estimates on weak trading, shares drop

REUTERS - Goldman Sachs Group Inc reported earnings that missed Wall Street expectations on Tuesday as weak trading revenue outweighed gains in other areas, sending its shares down nearly 3 percent in premarket trading.

By Olivia Oran and Sruthi Shankar

- Group Inc reported earnings that missed expectations on Tuesday as weak trading outweighed gains in other areas, sending its down nearly 3 percent in premarket trading.

The fifth-largest U.S. bank by assets generated its lowest trading in five quarters even as rivals reported gains. It blamed weakness in commodities, currencies, and credit revenue, as well as lower commissions and fees from equities trading.

Overall, Goldman's trading revenue, its biggest contributer to total revenue, dropped 2 percent to $3.36 billion. Equities trading fell 6 percent while fixed income trading was essentially flat, though analysts were more disappointed in that business relative to their expectations.

Goldman's profit rose from a difficult year-ago quarter, with earnings per share of $5.15 versus $2.68 in the first quarter of 2016. But the were well short of analyst forecasts of $5.31 per share, on average, according to Thomson I/B/E/S.

were down 2.8 percent at $219.95 in premarket trading.

"It sounds like they had a tough time navigating ... in 1Q," said Evercore ISI analyst Glenn Schorr. "Isn't good and it happens every once in a while for Goldman, but definitely not the norm."

Goldman's stood in sharp contrast to other big U.S. banks that have reported earnings so far. Bank of America Corp beat expectations on Tuesday due to surge in trading revenue, similar to from JPMorgan Chase & Co and Citigroup Inc last week. Goldman's chief rival Morgan Stanley will report on Wednesday.

has historically relied more on trading than other big banks, but has been trying to shift to more stable businesses like investment management and lending.

In a statement, Chief Executive Lloyd Blankfein described the business environment as "mixed" with client activity "challenged."

from investment banking, investment management and investing and lending all rose in the first quarter, but not enough to offset the sharp decline in trading.

Overall, Goldman's profit rose 80 percent to $2.2 billion from $1.2 billion in the first quarter of 2016, when sliding commodity prices, worries about the Chinese economy and uncertainty about U.S. interest rates led to weak across Its rose 27 percent to $8 billion from $6.3 billion.

The bank's expenses rose just 15 percent and it paid out a smaller share of its to employees. Its closely watched compensation-to-ratio was 41 percent in the first quarter, down from 42 percent a year earlier, but higher than the 38 percent ratio it reported for all of 2016.

(Reporting by Sruthi Shankar in Bengaluru and Olivia Oran in New York; Writing by Lauren Tara LaCapra; Editing by Sriraj Kalluvila and Meredith Mazzilli)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Business Standard
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Goldman Sachs misses estimates on weak trading, shares drop

By Olivia Oran and Sruthi Shankar

- Group Inc reported earnings that missed expectations on Tuesday as weak trading outweighed gains in other areas, sending its down nearly 3 percent in premarket trading.

The fifth-largest U.S. bank by assets generated its lowest trading in five quarters even as rivals reported gains. It blamed weakness in commodities, currencies, and credit revenue, as well as lower commissions and fees from equities trading.

Overall, Goldman's trading revenue, its biggest contributer to total revenue, dropped 2 percent to $3.36 billion. Equities trading fell 6 percent while fixed income trading was essentially flat, though analysts were more disappointed in that business relative to their expectations.

Goldman's profit rose from a difficult year-ago quarter, with earnings per share of $5.15 versus $2.68 in the first quarter of 2016. But the were well short of analyst forecasts of $5.31 per share, on average, according to Thomson I/B/E/S.

were down 2.8 percent at $219.95 in premarket trading.

"It sounds like they had a tough time navigating ... in 1Q," said Evercore ISI analyst Glenn Schorr. "Isn't good and it happens every once in a while for Goldman, but definitely not the norm."

Goldman's stood in sharp contrast to other big U.S. banks that have reported earnings so far. Bank of America Corp beat expectations on Tuesday due to surge in trading revenue, similar to from JPMorgan Chase & Co and Citigroup Inc last week. Goldman's chief rival Morgan Stanley will report on Wednesday.

has historically relied more on trading than other big banks, but has been trying to shift to more stable businesses like investment management and lending.

In a statement, Chief Executive Lloyd Blankfein described the business environment as "mixed" with client activity "challenged."

from investment banking, investment management and investing and lending all rose in the first quarter, but not enough to offset the sharp decline in trading.

Overall, Goldman's profit rose 80 percent to $2.2 billion from $1.2 billion in the first quarter of 2016, when sliding commodity prices, worries about the Chinese economy and uncertainty about U.S. interest rates led to weak across Its rose 27 percent to $8 billion from $6.3 billion.

The bank's expenses rose just 15 percent and it paid out a smaller share of its to employees. Its closely watched compensation-to-ratio was 41 percent in the first quarter, down from 42 percent a year earlier, but higher than the 38 percent ratio it reported for all of 2016.

(Reporting by Sruthi Shankar in Bengaluru and Olivia Oran in New York; Writing by Lauren Tara LaCapra; Editing by Sriraj Kalluvila and Meredith Mazzilli)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22