Goldman Sachs posted as a 38 percent drop in earnings in the third quarter on Thursday, missing analysts estimates, as the Wall Street bank was hurt by recent market turbulence and lower commodity prices.
Goldman said it had net income of $1.33 billion after payments to preferred shareholders, or $2.90 a share, down from $2.14 billion, or $4.57 a share, in the same period a year ago.
Net revenue at the investment bank dropped by 18 percent to $6.86 billion from $8.39 billion a year earlier.
”We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth,” CEO Lloyd Blankfein said in a prepared statement.
It was widely expected that Goldman would report a drop in profit for the third quarter given the recent market turbulence and sell-off in commodity prices. Goldman does not have a consumer banking business, and makes its money providing financial advice to companies and high net worth individuals, as well as a significant stock, bonds, and commodities trading operation.
Net revenue in Goldman’s fixed income, currency and commodities business was $1.46 billion this quarter, down a third from a year earlier.
Goldman’s lending and investing business, the firm’s own investments, also took a hit this quarter, posting revenue of $670 million, down 60 percent from a year ago. The firm said its investments ”were negatively impacted by a significant decrease in global equity prices.”
One positive note in Goldman’s results was its investment banking division, which saw a 6 percent increase in net revenue from a year ago. The amount of money Goldman made in advising companies through mergers and acquisitions, one of the firm’s highest profile businesses, was $809 million in the quarter, up 36 percent.
Not surprisingly, the firm’s employee compensation levels shrank, a reflection that Goldman employees are largely paid in bonuses and for performance. The amount of money Goldman set aside for compensation was $2.35 billion in the quarter, down 16 percent from a year ago.
The results did not meet Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $2.94 per share. Revenue also did not meet analysts’ expectations of $7.29 billion.
Goldman’s stock fell $2.31, or 1.3 percent, to $177.20 in pre-market trading.