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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?