News Worms
News Worms

Goldman whiffs in Wall Street bond rebound that boosts peers

Despite easy comparisons with last year's abysmal first quarter, when stocks and bonds had slumped amid corporate skittishness over the economy, Goldman on Tuesday reported $1.69 billion in revenue from trading in bonds, currencies, and commodities - a paltry 1-percent increase.

The surprise results contrast with reports from Goldman Sachs's three bigger competitors. That result beat the average estimate of $5.09 a share in a FactSet survey.

Companywide revenue rose 27% to $8.03 billion, compared with the $8.33 billion average estimate of analysts surveyed by Bloomberg.

Goldman shares have fallen 5.5 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed almost 5 percent. Douglass Winthrop Advisors LLC now owns 8,001 shares of the investment management company's stock worth $1,290,000 after buying an additional 26 shares in the last quarter. Goldman saw about a 2% in decline in trading revenue-a result that management blamed on a calmer market that produced less trading.

People familiar with the business said a combination of outdated trading technology, a late effort to court quantitative funds and overall fee pressure on the bank's key clients has blunted Goldman's edge. Merger fees fell 2% to $756 million, but stronger underwriting, together up 37%, more than made up the difference. During the same quarter in the prior year, the company earned $4.68 EPS.

However, net revenues in Institutional Client Services fell 2% to $3.36 billion, and were down 7% on a sequential basis.

Whalerock Point Partners LLC continued to hold its stake in Goldman Sachs Group Inc (NYSE:GS) during the fourth quarter, according to its most recent filing with the SEC.

After that first quarter, Chief Financial Officer Harvey Schwartz predicted: "We don't believe negative interest rates are going to be here forever".

Goldman's shares fell as much as 4 percent to $217.13 in the early trading in NY.

Goldman has historically relied more on trading than other big banks, but has been trying to shift to stable businesses such as investment management. Goldman's chief rival Morgan Stanley will report on Wednesday.

Revenue in Goldman's investment-banking division, which helps companies merge and raise capital, rose 16% to $1.7 billion. Likewise, JPMorgan reported revenue of $4.2 billion in its Fixed Income Markets breakout, a 17% improvement compared to the same period a year ago. Vetr lowered Goldman Sachs Group from a "hold" rating to a "sell" rating and set a $219.84 target price on the a report on Monday, December 26th.


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