Goldman's Profit Falls 21% as Trading Slows
April 15 2019 - 8:14AM
Dow Jones News
By Liz Hoffman
Goldman Sachs Group Inc.'s first-quarter profit fell 21% from a
year ago as quiet trading and underwriting took a toll across Wall
Street.
Goldman posted a quarterly profit of $2.25 billion, or $5.71 a
share, on revenue of $8.81 billion. Both are lower than a year ago,
when a newly amped-up market generated outsize trading fees.
The bank's profit beat the expectations of analysts polled by
Refinitiv, who predicted $1.97 billion, or $4.89 a share, though
revenue came in lighter than the expected $8.99 billion.
Trading revenue fell 18% to $3.61 billion compared with a
year-ago quarter, in which a suddenly vibrant market spurred
investors off the sidelines. That mirrors a 17% drop at JPMorgan
Chase & Co., which reported quarterly earnings last week.
But without the big consumer business that bolstered JPMorgan's
earnings last week, Goldman is more beholden to its Wall Street
traders and investment bankers to power earnings.
The firm has been investing heavily to change. It is growing a
consumer bank, partnering with Apple Inc. on its first credit card,
raising new investment funds it can collect fees to manage, and
building data services it hopes will lure new types of trading
clients.
Those business, though, "haven't yet hit their stride," Chief
Financial Officer Stephen Scherr said earlier this year. Meanwhile,
they have required more than $1 billion of investment spending, and
investors being asked for patience are looking for signs of
progress.
To that end, Mr. Scherr and his boss, Chief Executive David
Solomon, have set a slew of financial targets and promised regular
updates. That kind of transparency is unusual for Goldman, which
historically kept its cards close and relied on steady profits to
placate shareholders.
Goldman's investment-banking revenue was flat from a year ago at
$1.81 billion. A rise in merger fees helped offset a slowdown in
securities offerings that hit across Wall Street, exacerbated by a
government shutdown that delayed approvals for new issuances. The
firm said its backlog of deals, a closely watched measure of future
fees, was down from the end of 2018.
Goldman's money-management unit posted revenue of $1.56 billion,
down from a year ago.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
April 15, 2019 07:59 ET (11:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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