Goldman Sachs shares open lower as trading slump unnerves investors

Goldman Sachs shares open lower as trading slump unnerves investors

Today, Goldman Sachs shares opened in the red, despite reporting better than expected fourth quarter earnings per share. Investors were likely disappointed by the slump in trading revenues, although the firm’s investment banking had a successful period.

Goldman Sachs shares opened 1.57% lower at $244.40 Wednesday, as investors were disappointed with some details of the global banker’s earnings report.

Q4 trading revenues disappoint

Goldman Sachs reported a net loss of $2.14 billion, when a one-off tax charge, was factored in.

Excluding that charge, which relates to the new US tax code after US President Trump’s tax reforms, the global banking giant achieved $5.68 earnings per share. That was above analysts’ expectations of $4.91.

Much of those gains were due to a 44% rise in investment banking revenues in the fourth quarter of 2017, compared with the same quarter in 2016.

However, Goldman Sachs Q4 earnings report showed its earnings from trading bonds, securities and currencies was $1 billion, a 50% decline from the same period a year earlier.

“Last year, we delivered higher revenue and stronger pre-tax margins despite a challenging environment for our market-making businesses,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer.

“With the global economy poised to accelerate, new US tax legislation providing tailwinds and a leading franchise across our businesses, we are well positioned to serve our clients and make significant progress on the growth plan we outlined in September,” Blankfein added.

Annual earnings details

The earnings report didn’t just contain quarterly figures, it also detailed its full-year 2017 performance.

Full-year revenues were $7.83 billion, up from $7.61 billion in 2016. However, trading revenues were 34% lower than a year earlier. Investment banking revenues were the second highest on record.

Goldman Sachs shares are a little less than 6% up from a year ago. That’s a much smaller gain than the 22% increase in the S&P 500 and suggests investors remain unsure of the global banker’s strategy.

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.
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