Goldman Sachs profit misses estimates on weak equity trading

[NEW YORK] Goldman Sachs Group fourth-quarter profit fell nearly 13 per cent and missed market expectations on Tuesday as weak trading activity dampened a bumper year for deals, sending the shares of Wall Street's premier investment bank down 3 per cent.

Goldman's trading unit reported a lower profit in the quarter ended Dec 31 compared with last year as a more stable economy resulted in less volatility and fewer swings in financial markets.

The global markets business, which now houses the trading business and accounts for roughly a third of overall revenue, reported revenue of nearly US$4 billion, down 7 per cent.

Compared with a strong year-ago quarter when trading volumes skyrocketed, the bank said equity underwriting revenue fell 8 per cent in the quarter due to lower income from secondary stock offerings.

Goldman, however, reported a 45 per cent jump in investment banking revenue to US$3.80 billion as its top rainmakers raked in record fees from advising on some of the largest mergers, initial public offerings and deals involving special purpose acquisition companies.

Net earnings applicable to common shareholders fell to US$3.81 billion in the quarter ended Dec 31, from US$4.36 billion the same period a year earlier. Earnings per share fell to US$10.81 from US$12.08 a year earlier.

Analysts on average had expected a profit of US$11.76 per share, according to Refinitiv data.

Meanwhile on Friday, JPMorgan Chase and Citigroup Inc both beat analyst profit estimates. While profits at JPMorgan, the country's largest lender, were hurt by a slowdown in its trading arm, a stellar performance at its investment banking softened the impact.

REUTERS