Goldman Sachs confuses analysts with better-than-expected quarterly results

18 June 2008

Goldman Sachs Group, the world's biggest securities firm and the financial institution widely considered to have weathered the current storm in the markets better than its rivals, reported quarterly results topping those of competitors as the company said market turmoil continues to present opportunities.

The firm's results surpassed Wall Street analysts' expectations as gains in prime brokerage, asset management and commodities buoyed second-quarter profit.

Coming down to figures, Goldman Sachs said yesterday that second-quarter profit dipped modestly, sinking to $2.05 billion, or $4.58 cents a share, compared to $2.29 billion or $4.93 cents a share, earned in the same period a year ago. The firm reported total revenue, net of interest expenses, of $9.42 billion, down from $10.18 billion a year ago. This was its lowest second- quarter result since 2005.

Goldman fell $2.65, or 1.5 per cent, to $179.44 in New York Stock Exchange composite trading, the best performer of the biggest US investment banks. So far in 2008 the stock is down about 17 percent, compared with the 20 per cent plus drop of its peers. One of them, Morgan Stanley, is expected to declare its quarterly results today.

The results far surpassed those of rival Lehman Brothers which reported on Monday a loss of $2.8 billion, or $5.14 a share, for the second quarter ended 31 May. Write-downs on soured debt securities and bad trading results led Lehman to its first quarterly loss since the company went public in 1994. (See: Financial crisis claims jobs of Lehman CFO and COO)

Goldman's net revenue from investment banking totaled $1.69 billion, 2 per cent lower than the second quarter of 2007 but 44 per cent higher than the first quarter of 2008. Similarly, Goldman said net revenues in its trading and principal investments business fell 16 per cent from a year ago but rose 9 per cent form the first quarter.