Goldman Sachs profits plunge 70 per cent

Goldman Sachs has posted the worst slump in its profits since it went public in 1999.

Goldman's third-quarter earnings nosedived 70 per cent to $810 million, shrunk by the credit crunch, financial markets turmoil, and the evaporation of its advisory fees on corporate deals.

Goldman's investment banking division suffered a 40% fall in revenue to $1.29bn, including a 56% plunge in financial advisory fees, blamed on an industry-wide decrease in mergers and acquisitions.

Goldman's trading and principal investments division saw its revenue fall by 67 per cent to $2.7 billion, with a $500 million loss on residential mortgage-related securities and a $325 million loss on commercial mortgages. The bank's principal investments operation made a $453 million mostly because of corporate and property investments.

However, Goldman has stayed profitable; no small feat in today's choppy waters around Wall Street, and that has allowed it to fare better than competition. The company rejects suggestions that the standalone structure of Wall Street banks was under threat.

David Viniar, Goldman's CFO said that ''its not the business model, it's the performance that matters," saying that despite its share of mistakes, Goldman will protect its franchise ''at all costs."