Goldman Sachs Q2 Profit Drops 11% (GS)

PUBLISHED: Jul 17 2012 @ 10:50 | Comments (0) | More info about Ed Liston

Wall Street giant Goldman Sachs Group Inc. (NYSE:GS) today reported an 11% decline in its second-quarter profit as investment banking revenue fell due to a slowdown in M&A activity.

Goldman Sachs relies heavily on its trading and investment banking units. However, trading and investment banking businesses have come under pressure as investors remain cautious due to the challenging macro environment, and companies hoard cash instead of making deals.

According to Dealogic, M&A activity in the second quarter of 2012 was at its lowest level since the third quarter of 2009. As a result, GS’s investment banking revenue dropped 17% from a year ago to $1.21 billion.

Net revenue from the Fixed Income, Currency and Commodities (FICC) division, which accounts for the bulk of sales and trading revenue, stood at $2.19 billion in the second quarter, an increase of 37% over the same period last year, but down significantly from the first quarter of 2012.

Goldman Sachs net revenue for the quarter stood at $6.63 billion, down 9% over the same period last year but above analysts’ estimate of $6.28 billion. Goldman’s profit for the quarter was $962 million, down from $1.09 billion reported in the same period last year.

GS stock is currently trading 0.04% higher at $97.72.

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