Goldman Sachs used to look invincible. Within the fourth quarter, it misplaced cash.
The Wall Road agency on Wednesday reported its first quarterly loss since 2011. It was the results of a one-time $four.four billion cost stemming from the brand new tax regulation. However even ignoring that uncommon occasion, Goldman’s weak core outcomes confirmed how far the agency has fallen.
The financial institution’s per-share earnings and income had been each greater in contrast with a yr earlier with out the tax cost. However the outcomes introduced on Wednesday additionally revealed a decline in Goldman’s buying and selling would possibly, which has been drained by a potent mixture of placid markets and quiet shoppers. Income in its enterprise of shopping for and promoting bonds, commodities and currencies — historically an engine of Goldman’s results — sank to $1 billion within the fourth quarter, half of what it was throughout the identical interval in 2016. For the yr, web income in that enterprise fell 30 p.c.
The drop despatched Goldman’s shares down three p.c on Wednesday.
Tighter monetary laws, strikingly synchronized world financial coverage and new competitors from monetary upstarts are hitting trading at banks like Goldman particularly laborious. On Wednesday, the financial institution used one phrase to explain present circumstances on Wall Road: “difficult.” Its shoppers are inserting fewer commerce orders than they did when market costs had been altering extra shortly and extra dramatically.
Rivals like Financial institution of America, Citigroup and JPMorgan Chase have additionally reported declines within the so-called fixed-income buying and selling enterprise, however none fairly as massive as Goldman’s. Financial institution of America mentioned Wednesday that income from its buying and selling companies was down 13 p.c within the fourth quarter in contrast with the identical interval a yr earlier. Citigroup’s was down 18 percent, the financial institution mentioned Tuesday.
There have been different, brighter parts to Goldman’s outcomes, together with near-record funding banking income and just below $three billion in debt-underwriting income — a report for the financial institution. Goldman’s earnings per share, excluding the tax cost, exceeded analysts’ expectations.