Goldman Sachs Group Inc's profit plunged for the second straight quarter as bond trading revenue fell by a third amid market turmoil stemming from concerns about global growth. Revenue fell in all of the bank's major businesses except investment banking, which benefited from a surge in take-overs. The results are the latest example of how the grim trading environment is gutting Wall Street.
Turbulent trading, much stemming from worries about the flow-on effect of China's cooling economy, was aggravated by uncertainty over the timing of a US interest rate hike. "We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth," Chief Executive Lloyd Blankfein said in a statement on Thursday.
Goldman, which released its results through its website instead of a press release service for the first time, said revenue from fixed-income, currency and commodity (FICC) trading, fell 33 percent to $1.46 billion. This was the biggest year-over-year drop since the third quarter of 2013, when markets began to worry that the Federal Reserve was about to start tightening monetary policy.
Goldman joins JPMorgan Chase & Co, Bank of America Corp and Citigroup Inc in reporting a drop in revenue from bond trading. Both JPMorgan and Bank of America reported 11 percent declines in FICC revenue, while Citi's revenue from the business fell about 16 percent. Arch-rival Morgan Stanley will report results on Monday. "Investors sit it out in such a market. They don't trade," said Erik Oja, an analyst at S&P Capital IQ. "Unless such a market rout happens again, I would expect fourth-quarter trading revenues at the banks to improve compared to third-quarter."
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