Goldman profits fall 21% from year ago, hurt by trading

FILE - In this April 10, 2019, file photo, Goldman Sachs chairman and CEO David Solomon testifies before the House Financial Services Commitee during a hearing in Washington. Goldman Sachs said its first quarter earnings fell by 21% from a year earlier, hurt by a slowdown in trading. Solomon described the quarter as a "muted start to the year," in a written statement. (AP Photo/Patrick Semansky, File)

NEW YORK — Goldman Sachs said its first quarter earnings fell by 21% from a year earlier, hurt by a slowdown in trading.

The investment bank earned a profit of $2.25 billion, or $5.71 a share, down from a profit of $2.83 billion, or $6.95 a share, in the same period a year earlier. The results did beat analysts' expectations, however. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $4.74 per share.

Goldman's profits were primarily hurt by their trading desks. Once a place of record profitability for the bank, Goldman's trading desks have struggled under lighter trading combined with periods of extreme volatility that are hard to navigate.

Net revenues in Goldman's fixed income, currency and commodities division was $1.84 billion, down 11% from a year ago. Stock trading was even worse, reporting net revenues of $1.77 billion, down 24%.

David Solomon, Goldman's chairman and chief executive officer, described the quarter as a "muted start to the year," in a written statement.

Other parts of Goldman's businesses struggled as well. The bank reported a 12% decline in net revenues in its investment management businesses, and a 14% decline in net revenues in its investing and lending business.

Goldman has undertaken significant efforts in recent years to diversify the company into new forms of banking and financial services. The bank has a growing consumer banking franchise known as Marcus, which offers high-interest online savings accounts and CDs as well as debt consolidation personal loans. Goldman also recently jumped into the credit card business, becoming the issuing bank for Apple's new credit card.

The bank still does not break out Marcus, or its consumer bank franchise, as a line item on its results. However the bank did see a significant jump in interest income in the quarter, reporting net interest income of $1.22 billion, up 33% from a year earlier.

Goldman's return on tangible equity, a measurement that describes how well a bank is performing with underlying assets, was 11.7%. Banks like Goldman and its competitor Morgan Stanley aim for a return on equity above 10%.

Firm-wide Goldman said it had net revenues of $8.81 billion, down 13% from last year, below analysts' estimates, according to Zachs.

Must Read

Iranian president visits 2 Gulf Arab states to...

Feb 15, 2017

Iranian President Hassan Rouhani has met with the leaders of Oman and Kuwait as part of a two-state...

In Kuwait, 'too many foreigners' becomes a...

Feb 21, 2017

Kuwait's first new government hospital in more than three decades will soon open its doors _ but to...

Tillerson aims to ease Qatar crisis with shuttle...

Jul 10, 2017

U.S. Secretary of State Rex Tillerson is in Kuwait to try to resolve a dispute between Qatar and...

Kuwait calms Philippines after dead worker found...

Feb 13, 2018

Kuwait's foreign minister is trying to calm the anger of the Philippines after a dead Filipina was...

Kuwait expels Philippines ambassador amid maid...

Apr 25, 2018

Kuwait expels Philippines ambassador, recalls own envoy amid dispute over housemaid abuse