The bank announced Tuesday that profit in the second
quarter of the year was down 86 percent from the first quarter of 2010
and 84 percent from the second quarter of 2009 to
The announcement by the company comes just days
after it settled a lawsuit with the Securities and Exchange Commission,
which had accused the bank of misrepresenting a deal it made during the
financial crisis. The bank did not admit to criminal wrongdoing, but it
did agree to pay
In another one-time hit to the bottom line, Goldman paid
Even excluding the payments for the fine and the bank tax, Goldman’s earnings fell below analysts’ expectations.
The biggest declines came in revenues from the company’s trading desks, which have been the engine of growth at all
banks over the past year. During the past three months, stock and bond
prices have been volatile, and other banks that have already released
results for the second quarter have shown sharp declines in profit.
Goldman’s revenue from stock trading dropped 84
percent from last quarter while revenue from bond and fixed-income
trading fell 40 percent.
“The market environment became more difficult during
the second quarter, and, as a result, client activity across our
businesses declined,” the bank’s chief executive,
Many analysts have wondered whether Goldman’s legal
troubles would hurt the bank with clients. Goldman reported that its
earnings from financial advisory work were actually up from last
quarter and a year ago, though its revenue from underwriting stock and
bond offerings for clients was down significantly.
Goldman has come under fire in the past for the
massive sums of cash it has set aside for employee bonuses and pay.
This quarter, the bank dedicated
percent of the total revenues, for its employees — the same proportion
of revenue provided for bonuses during the first three months of the
The past three months have been widely described as
some of the most difficult in the bank’s long history, but the ability
to settle the lawsuit has given the company’s prospects a positive
jolt. The bank itself does not appear to be scaling back its ambitions,
having hired 1000 new employees during the second quarter.
(c) 2010, Los Angeles Times.
Visit the Los Angeles Times on the Internet at http://www.latimes.com/
Distributed by McClatchy-Tribune Information Services.