Goldman Sachs Loses $393 Million In Second Loss Ever As Public Company
Goldman posted a deeper than expected quarterly loss of $393 million, or 84 cents per share, according to its news release. The sharp decline in the value of Goldman's investments and customer trading assets led to less trading and markdowns of Goldman's investments, according to Bloomberg and Reuters.
The quarterly loss of 84 cents stood in stark contrast to earnings of $2.98 per share during the third quarter of last year, according to The Financial Times. Goldman's total quarterly revenue has plummeted 60 percent since the third quarter of last year, according to the FT.
Trading and investment banking, once highlights within the firm, struggled over the summer. Trading revenue was 13 percent lower than during the same period last year, and investment banking revenues fell 33 percent, according to Bloomberg. The value of the assets held by Goldman's investing and lending division also fell sharply, according to Reuters.
“Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter,” Goldman's chief executive Lloyd Blankfein said in a statement.
Goldman Sachs performed worse than many analysts had expected. On average, analysts had predicted a loss of 16 cents per share, in contrast to the actual loss of 84 cents per share, according to Reuters.
The bank has also cut its operating expenses significantly in the last year, according to the FT.
Analyst Todd Schoenberger, managing director at Landcolt Trading, told BBC News that Goldman's third-quarter loss was not a surprise because of the bank's exposure to the European sovereign debt crisis.
"The underlying cancer on all these reports is Europe, all these banks have risk from Europe and that region will continue to have a negative impact," Schoenberger said.
Goldman's shares fell one percent in premarket trading, according to Reuters.