ALL good things must come to an end, but Goldman’s seemingly runaway success has screeched to an ungodly halt.
Some might accuse the investment bank of massaging the numbers downwards to stop a witch hunt in its tracks, but spinning can only get one so far.
Even stripping out the effects of the UK bonus tax and its settlement with the SEC, quarterly profits came in at less than half last year’s haul.
The culprit was lower trading volumes and higher volatility. Revenues in the bank’s flagship trading and principal investments division were off 39 per cent to $6.55bn; equities tanked 62 per cent to $1.2bn; currency and commodity trading lost 35 per cent to $4.4bn; investment bank revenues fell 36 per cent to $917m. Down, down, down.
Goldman can’t be blamed for a meeker client base, but its traders have to take some responsibility. Equity volatility blew out between the first and second quarters and the bank did not cut its positions fast enough.
Investors always knew the halcyon days of last year would not arrive again, but this was a poor performance nonetheless.