Goldman Sachs gets an embarrassing start to the year

  • Goldman Sachs gets an embarrassing start to the year

Goldman Sachs gets an embarrassing start to the year

Goldman's profit rose from a hard year-ago quarter, with earnings per share of $5.15 versus $2.68. Goldman, the fifth-largest USA bank by assets, blamed weakness in commodities, currencies, and credit revenue, as well as lower commissions and fees from equities trading.

NEW YORK (AP) - Goldman Sachs had a rare miss in its first quarter results, the bank said Tuesday, as its typically best-in-class trading desks did not perform as well as its competitors.

The white-shoe investment bank posted disappointing earnings for the first quarter, with trading revenue - traditionally the bank's big money-maker - ceding ground to rivals with less-fancy names.

Still, analysts had expected about $5.31 a share. Equities trading revenue fell 6 percent while fixed income trading was essentially flat, though analysts were more disappointed in that business relative to their expectations.

Overall, Goldman's trading revenue, its biggest contributer to total revenue, dropped 2 percent to $3.36 billion. Shares of the company slid 3.5 percent to $218.25 at 9:32 NY, the worst performance in the Dow Jones Industrial Average.

"It sounds like they had a tough time 1Q", said Evercore ISI analyst Glenn Schorr. While JPMorgan Chase & Co. and Citigroup Inc. also reported similar results on trading. Citi, Bank of America and JP Morgan on average, 1Q FICC trading results were up about 5 percent versus 2015.

More than other large financial institutions, Goldman relies on trading to generate a profit. Investment banking net revenue was $1.7 billion in the quarter, up 16 percent from a year earlier.

In a statement, Goldman Sachs Chairman and CEO Lloyd Blankfein called the quarter "mixed" and that client activity was "challenged". Given that its peers found universal success in trading during the first quarter, Wall Street wasn't happy to take that answer at face value, perhaps believing that the decline in trading income may be more than just a one-time occurrence. Non-interest income for the quarter rose 37.67 percent over the previous year period to $7,510 million.

IBM's revenue for the first quarter of the year missed for the first time in five years due to weak demand in its technology services business.