Goldman Sachs Group Inc. (GS) reported an 11 percent drop in earnings that beat analysts’ estimates on trading even as first-half revenue fell to the lowest since 2005.
Second-quarter net income slid to $962 million, or $1.78 a share, from $1.09 billion, or $1.85, a year earlier, the New York-based company said today in a statement. The average estimate of 25 analysts surveyed by Bloomberg was $1.18 a share.
Goldman Sachs, the fifth-biggest U.S. bank by assets, has cut jobs and other costs to adapt to a slump in trading, which accounted for 60 percent of 2011 revenue. Chief Executive Officer Lloyd C. Blankfein, 57, who has run the company for six years, said last month that the slowdown is a temporary reaction to the financial crisis and that emerging markets will generate most of his firm’s growth.
“The markets are challenged pretty much across the board,” William Fitzpatrick, a Milwaukee-based analyst at Manulife Asset Management, which has about $800 million under management including Goldman Sachs shares, said before the results were released. “I would be surprised if we didn’t hear about continued cost reductions.”
After surging in the first quarter, major global stock market indexes including the Standard & Poor’s 500 and Hang Seng Index (HSI) dropped in the second quarter amid signs of slowing economic growth in China and the sovereign debt crisis in Europe. Goldman Sachs’s shares closed yesterday at $97.68 in New York Stock Exchange composite trading, up 8 percent this year and down 24 percent from a $128.07 peak on March 26.
JPMorgan Chase & Co. (JPM), the biggest U.S. bank by assets, last week said second-quarter profit at its investment bank fell 7 percent from a year earlier even as it reduced costs 12 percent. Citigroup Inc. (C), the third-biggest U.S. bank, reported a 12 percent drop in second-quarter earnings yesterday and said it lowered total operating expenses 6 percent.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
