Scale of Goldman loss suprises even those braced for a fall

 

The seepage of red ink at Goldman Sachs had been well telegraphed but the depth of the quarterly loss announced by the investment firm yesterday was greater than most analysts had expected, reflecting the difficulties besetting the industry as a whole amid continuing economic uncertainty and yo-yoing markets.

The negative tally for the third quarter came to $428m (£274m) compared with a $1.7bn profit a year ago. It is only the second time that Goldman Sachs has failed to make a quarterly profit since going public 12 years ago.

"Well, we were braced for impact and we got it," Nomura's analyst Glenn Schorr wrote in a note to clients. With most investors having already factored in the quarterly dip, shares in the bank rose in morning trading in New York.

Goldman, in common with other large Wall Street banks, has been cutting costs. Since the second quarter it has shed roughly 1,300 employees. For the more than 30,000 still on its payroll, this quarter's results meanwhile foretell a cut in bonuses for 2012. The firm said it had set aside just over $10bn so far to cover compensation and assorted benefits for its staff, about 24 per cent less than it had this time last year.

Wall Street watchers, including angry protestors still crammed into Zuccotti Park in downtown Manhattan, may pause to wonder at how Goldman, with its reputation as a dollar-printing house, could be losing money. Yet there will be no rivers of tears. Even with the cuts in the bank's compensation budget the average pay packet this year for employees of the bank should come out at a handy $292,836.

Goldman said revenue slumped 60 per cent to $3.6bn in the quarter. The bank was hurt by a sharpdecline in underwriting business, reflecting a drop-off in public offerings as the economy continues to flirt with renewed recession. Investment banking revenue was down a third. Revenue from fixed-income trading also fell sharply.

"CEO and investor confidence as well as asset prices across markets were lower in the third quarter, given the uncertain macroeconomic and market conditions. Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter," chief executive Lloyd Blankfein said.

Goldman was also hit by markdowns on some of its equity holdings. The bank said it lost nearly $3bn on investments in stocks, bonds and its stake in the Industrial and Commercial Bank of China.

Bank of America meanwhile reported a quarterly profit of $6.23bn, in part because of accounting changes and assets sales. Trading revenue from its Merrill Lynch division showed a decline, however.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent