Bond trading rebound lifts profits at Goldman Sachs
Goldman Sachs Group reported a 58pc jump in third-quarter profit yesterday as bond trading rebounded and the Wall Street bank managed to keep a lid on expenses.
Goldman reported nearly $2bn (€1.8bn) in revenue from trading fixed income, currency and commodities, making it the biggest contributor to overall revenue.
Strong bond issuance and better conditions in credit and mortgage markets helped the bottom line, chief financial officer Harvey Schwartz said on a conference call with analysts. But he noted that the business only seems to be doing so well because it performed so poorly in the year-ago period. "It wasn't so much about tailwinds as it was about not having so many headwinds in the quarter," said Schwartz. "It translated nicely for us." He noted that while credit and mortgage trading results were better, currencies were flat and rates declined slightly.
Goldman, the fifth largest US bank by assets, has historically been more reliant on bond trading than its peers.
That helped the bank earn big profits leading into the 2007-2009 financial crisis, but financial reform rules imposed since then have hindered the business.
In an effort to buoy profits, Goldman launched an efficiency programme earlier this year, with the goal of reducing annual expenses by $700m.
Goldman shares, which had fallen 6.2pc this year through Monday's close, were up 1.3pc in morning trading yesterday, to $171.19. Goldman generated $2.1bn in net income for common shareholders, up 58pc from the year-earlier period. It was the bank's second straight rise in quarterly profit after four quarters of decline. Chief executive Lloyd Blankfein described it as "solid performance." (Reuters)