Investment banking giant Goldman Sachs has reported a 56 per cent decline in profits for the first quarter, to $1.2bn (£834m), or $2.68 per share. The decline marks the fourth straight quarter of declining profit for the bank.
Revenue for the first three months of the year came in at $6.34bn, down from $10.62bn in the first quarter last year and far below expectations.
A poll of analysts by Thomson Reuters had expected the New York-headquartered bank to post earnings per share of $2.45, on revenue of $6.73bn.
Revenues slid 40 per cent from the first quarter of 2015, making this the worst revenue quarter for Goldman since the end of 2011.
Lloyd Blankfein, chairman and chief executive, said:
The operating environment this quarter presented a broad range of challenges, resulting in head winds across virtually every one of our businesses. Looking ahead, we will continue to focus on delivering superior service to our clients and managing our business efficiently, which remain essential to generating shareholder value over the long term.
The numbers round off a first quarter earnings season for the big six US banks that has seen most come in ahead of low estimates.
Expectations have been dragged down by volatile stock markets around the world in the first two months of this year, sliding commodity prices, as well as growth concerns over China and other emerging markets.
Weakness in the energy industry has also resulted in US banks having to put significant cash aside for credit defaults in the sector.
JP Morgan Chase, Bank of America, Wells Fargo, Citigroup and Morgan Stanley have in recent days roundly beat out expectations that had come down sharply over the last two months.
Over the the last four weeks, 22 Wall Street analysts have brought their expectations down by around 22 per cent, or $0.94, from Goldman’s EPS estimates according to Bloomberg.
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Morgan Stanley, Goldman’s traditional rival, yesterday posted a 54.4 per cent drop in profit after wild market swings earlier this year dragged on trading and investment banking.
Goldman's share price was up 0.19 per cent in premarket trading, after rising around five per cent over the last five sessions.
Revenue from the banks trading bonds, currencies and commodities arm fell about 47 per cent to $1.66bn, accounting for 26.2 per cent of total revenue in the quarter. Before the financial crisis the division brought in around 40 per cent of revenue.
Investment banking was down 23 per cent to $1.46bn, while equity trading dropped 23 per cent to $1.78bn.
Investment and lending, the bank's property trading group, slumped by a whopping 95 per cent from $1.7bn to just $87m as Goldman wrote down the values of securities held on its books.
Yesterday Goldman Sachs completed the acquisition of online retail bank GE Capital Bank, rebranding it as GS Bank and taking on its $16bn of deposits.
It's Goldman's first foray into retail banking and puts it in direct competition with the likes of Wells Fargo and Bank of America.
US customers will be able to open accounts online with a deposit of $1.
Esta Stecher, chief executive of GS Bank said:
We are committed to providing our new online deposit customers the high level of service they have come to expect. GS Bank will continue to offer smart, simple savings products backed by the skilled and knowledgeable team joining us from GE Capital Bank.