Big blow of fatigue in the trading rooms at Goldman Sachs. The brokerage activity, which is the showcase of the business bank and american investment to attract institutional and large private fortunes, is struggling since the beginning of the year. In the second quarter, the revenue from trading fixed income, currency and commodities (the “fixed income”) fell by 40% compared to last year, to $ 1.15 billion. Goldman Sachs was offset by a good activity on the equity markets, but its net income is stable this quarter at $ 1.6 billion.
All large us banks have been penalized by the context of low activity on the markets of rate, but to a lesser degree. This has resulted in a fall of 19% of revenue fixed income at JP Morgan, by 9% at Bank of America, 6% in Citigoup. The action Goldman Sachs declined 2.2% on Wall Street on Tuesday.
“This has been the worst quarter in the activity of brokerage of raw materials since we are listed on 73 quarters[since 1999] in the past,” said the financial director, Martin Chavez, during a conference call Tuesday. “We have not surfed on the markets as well as we would have liked or as we have done in the past.”
Reduce its dependence on markets
The first bank business world in the ranking of mergers and acquisitions, and fifth largest u.s. bank by total assets, had already admitted to having “under-performed” in the first quarter. Its position as a leader in the “commodities” dates back to its acquisition in 1981 of the broker J. Aron, a specialist in metals and agricultural raw materials.
“An operational environment of contrasts has persisted in the second quarter, while conditions continued to support the activity of underwriting and mergers and acquisitions, while limiting some of the activities of market-making,” commented the CEO, Lloyd Blankfein, Tuesday, in the press release.
Blankfein has also pointed out that revenues as a whole and the profitability had increased, thanks to the diversity of its activities. In order to reduce its dependency on trading, Goldman Sachs has developed in more stable activities, such as management of assets that generated 1.53 billion dollars in revenue in the second quarter, up 13% compared to last year.