Published: Wed, April 19, 2017
Business | By Sandy Mccarthy

Goldman Sachs' profits miss forecasts as trading struggled

Goldman Sachs' profits miss forecasts as trading struggled

Goldman Sachs Group Inc. offered a rare mea culpa on Tuesday, after uncharacteristic weakness in its bread-and-butter trading business helped the investment-banking powerhouse to deliver a first-quarter earnings stumble.

The Average Earnings Estimate for the Current Fiscal quarter is $3.98 per share, according to consensus of 23 analysts.

Revenue of $8.026 billion vs. $8.446 billion expected by Thomson Reuters analysts' consensus.

Goldman's shares fell as much as 4 percent to $217.13 in the early trading in NY.

Goldman's profit rose from a hard year-ago quarter, when it posted earnings per share of $2.68. Year to Date (YTD) performance of The Goldman Sachs Group, Inc.

Goldman's 2 percent decline in trading revenue came in sharp contrast to results from JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp, which all beat estimates due to strength in trading.

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Revenues surged 26.6% from a year ago to $8.03 billion, but still missed analysts' view for $8.33 billion.

Goldman executives explained that low volatility resulted in less trading activity by its clients, adding that commodities and currency trading were "significantly lower" in prepared remarks. Bank of America also reported earnings Tuesday, beating or meeting Wall Street expectations on nearly every single metric.

United States banking giants Goldman Sachs and Bank of America have delivered a hefty jump in profits as they reaped the rewards of higher interest rates. Treasury yields have since fallen to lows not seen in at least a month as concerns about economic growth and supportive fiscal policy have increased. "Goldman was down 46 percent, so you know there is no sugar coating", Kotowski said.

People familiar with the business said a combination of outdated trading technology, a late effort to court quantitative funds and overall fee pressure on the bank's key clients has blunted Goldman's edge. Acadian Asset Management LLC increased its stake in Goldman Sachs Group by 887.5% in the third quarter.

The business also recently announced a quarterly dividend, which was paid on Thursday, March 30th. Goldman Sachs said its investment-banking backlog decreased from the fourth quarter and last year's first quarter. Vetr lowered Goldman Sachs Group from a "hold" rating to a "sell" rating and set a $219.84 target price on the a report on Monday, December 26th.

Goldman Sachs's share price surged 32 percent from the USA presidential election through the end of previous year on optimism Trump would usher in pro-growth economic policies, and as firm alumni including former President Gary Cohn took up key positions in the administration.

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