Goldman Sachs Group Inc Earnings Miss As Institutional Unit Drags
- Author: Todd Kelly Apr 19, 2017,
Apr 19, 2017, 1:28
Bank of America reported a 17% increase in FICC revenue this quarter over the same period a year ago.
Goldman Sachs' investment banking revenue rose 16% year over year to $1.7 billion from $1.46 billion last year and beat the consensus estimate of $1.63 billion, while Institutional Client Services revenue fell 2% to $3.36 billion.
It was Goldman's first miss on EPS since the fourth quarter of 2015.
In a statement, Goldman Sachs Chairman and CEO Lloyd Blankfein called the quarter "mixed" and that client activity was "challenged".
Bank of America's global fixed-income trading revenue grew 29%, while Goldman only posted a 1% gain in its fixed-income segment.
JPMorgan Chase, Citigroup and Wells Fargo have all been boosted by higher interest rates after the US Federal Reserve hiked the cost of borrowing once in December and again in March. Oppenheimer Holdings Inc. reiterated an "outperform" rating and issued a $256.00 price target (up previously from $252.00) on shares of Goldman Sachs Group in a report on Tuesday, January 24th.
Investors weren't enthused by Goldman Sachs' performance, with its shares falling $6.21 (-2.74%) to $220.05 in premarket trading Tuesday. In more recent years, the business has come under pressure from factors including weak market activity and new regulations that restrict what US banks can do and how much capital they must hold against trades.
Revenue, however, came below the market expectation of around $8.4 billion, which pushed Goldman Sachs stocks lower in Wall Street.
Goldman Sach's operating expenses were 15 percent higher both year-over-year and quarter-over-quarter, totaling $5.49 billion in Q1 2017.
Analysts on average had expected earnings of $5.31 per share, according to Thomson Reuter. Overall trading revenue of $3.36 billion was down about 2% from a year earlier.
Goldman has historically relied more on trading than other big banks, but has been trying to shift to relatively stable businesses like investment management and lending.
The megabank missed earnings expectations in both earnings per share and revenue, causing its stock to fall to its lowest level in almost five months, the article stated.
Goldman Sachs's stock dropped $9.88, or 4.4 percent, to $216.36. The firm earned $8.17 billion during the quarter, compared to the consensus estimate of $7.80 billion.