The investment bank's profit got hit hard by a sharp decline in fixed-income trading just like at its rivals. Profit slumped for the fourth straight quarter. Fred Katayama reports.
Like Morgan Stanley, like Goldman. A huge drop in fixed-income trading helped whack quarterly profit by more than half at Goldman Sachs. The $1.1 billion earned marked the fourth straight quarter of profit declining year-over-year. Revenue fell in every one of the bank's four major business units. Also taking a big hit: investment banking, which was affected by the decline in completed mergers and acquisition deals. CEO Lloyd Blankfein said the bank encountered "headwinds across virtually every one of our businesses." With such headwinds, massively shrinking expenses couldn't lift the bottom line. The bank slashed compensation and benefits by 40 percent to reflect the steep decline in revenue. Its return on equity, a gauge on profitability, fell steeply. UBS analyst Brennan Hawken said, "Goldman Sachs only generated a 6.4 percent return on equity in the quarter, clearly not immune to the difficult environment." Goldman was the last of the major banks to report its results. Like the others, the quarter was ugly, but profit beat Wall Street's low targets. Its stock, which has underperformed that of other big banks with its nearly 12 percent drop this year, rose in early trading.