Goldman Sachs Drops As Profits Slump 24%
Fiona Cincotta January 15, 2020 9:41 AM
Goldman Sachs declines as profits drop
Goldman Sachs is trading 1.7% lower in pre-market trading as investors digest a mixed set of results.
EPS -24% to $4.69 vs $5.20 exp.
Revenue +23% to $9.96 billion vs $8.601 billion
Investment banking revenue dropped 6% to $2.06 billion
Fixed income trading jumped 63% to $1.77 billion.
Equity trading climbed 12% to $1.71 billion.
Goldman Sachs beat expectations on revenue, but quarterly profits were stung by a $1.1 billion litigation charge. This is the second straight quarter in which Goldman Sachs missed expectations. The bank has not said what the legal provisions related to but are most likely related to the final negotiations over 1MDB money laundering and bribery scandal.
Goldman Sachs results are in stark contrast to peer JP Morgan chase which posted record profits not only for the quarter but also for the year 2019.
Whilst the fixed income revenue at GS was a standout performer, investment banking was the worst performing division, dropping 6% year on year compared to a 6% increase at JP Morgan Chase.
Goldman’s is trying to diversify by launching a credit card, building a retail brokerage and commercial banking arm. As is common with new initiatives it is losing money so far. $1.3 billion has been invested into its consumer efforts, which are right now nothing more than a drag on profit. Going forwards the plan is Goldman Sachs will be more diversified and better able to weather tough conditions.
The results will pile pressure on David Solomon ahead of Goldman Sachs first ever investors day, due to be held in 2 weeks. Here David Solomon will need to convince investors that he and his team have found a way to improve returns at Goldman Sachs.
Goldman Sachs rallied 37% across the previous year, reaching an all time high $248.49 in the previous session. Whist the share price has dropped away from the high, trading 1% lower, it remains firmly above its 50, 100 and 200 sma. It has now fallen out of over bought territory on the RSI.
Immediate resistance can be seen at 248.49 high previous session. Meanwhile a break below $232 could open the door to further losses.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.