Goldman Sachs names new CEO, profit beats; shares dip

By Matt Scuffham and Aparajita Saxena (Reuters) - Goldman Sachs Group Inc announced a new chief executive on Tuesday and reported a better-than-expected jump in quarterly profit, but investors focused on relatively weak performance in its main businesses.

Reuters July 18, 2018 00:06:32 IST
Goldman Sachs names new CEO, profit beats; shares dip

Goldman Sachs names new CEO profit beats shares dip

By Matt Scuffham and Aparajita Saxena

(Reuters) - Goldman Sachs Group Inc announced a new chief executive on Tuesday and reported a better-than-expected jump in quarterly profit, but investors focused on relatively weak performance in its main businesses.

Goldman Sachs, once considered the most savvy trading house on Wall Street, said its bond trading revenue climbed 45 percent in the second quarter and total equity trading was flat, compared with an unusually weak year-ago quarter.

The bank's trading performance was not as strong as some rivals and analysts suggested that beating Wall Street profit estimates was due to lower-profile businesses such as investing and lending and by setting aside less money for bonuses.

Its shares fell 1.9 percent to $227.05 in early trading.

"Earnings benefited from volatile revenue sources and expense cuts, likely viewed as uninspiring," UBS analysts said in a research note.

After months of speculation, the bank appointed Chief Operating Officer David Solomon as its next leader. He will take over Oct. 1 from longtime CEO Lloyd Blankfein, and is tasked with executing a plan to grow revenue by entering new businesses and refashioning old ones.

The change of leadership comes at a turning point for Goldman Sachs as it tries to generate another $5 billion in annual revenue by growing its fledgling consumer bank, squeezing more from businesses like asset management and changing the way it approaches trading.

Overall, Goldman Sachs' profit in the second quarter rose 44 percent to $2.3 billion, or $5.98 per share, compared with $1.6 billion, or $3.95 per share, in the same quarter a year earlier.

The per-share results topped analysts' average estimate of $4.46 per share, according to Thomson Reuters I/B/E/S.

The bank's bond trading revenue rose 45 percent, compared with an unusually poor quarter a year ago, when it posted the weakest commodities results in its history.

In total equity trading, Goldman Sachs lagged rivals JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp, all of which reported gains.

Total revenue rose 19 percent to $9.4 billion, including increases in everything except fees from advising on mergers and acquisitions.

The bank's compensation ratio, which measures how many dollars of revenue are set aside for pay and benefits, declined to 39 percent in the second quarter from 41 percent in the prior and year-ago quarter. The decline came even as Goldman Sachs hired more staff.

(Reporting By Aparajita Saxena in Bengaluru and Matthew Scuffham in Toronto; Writing by Sweta Singh and Lauren LaCapra; Editing by Saumyadeb Chakrabarty and Bill Rigby)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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