Goldman Sachs profit misses estimates on weak equity trading

NEW YORK: Goldman Sachs Group Inc profit fell nearly 13% and missed expectations on Tuesday as a less volatile equity market hurt trading business and dampened a bumper year for deals, sending the shares of Wall Street’s premier investment bank down 4%.

Bank earnings have been hurt this quarter by weak trading volumes as the Federal Reserve slowed the pace of its asset purchases after an 18-month period in which it pumped liquidity into capital markets to ease the impact of the COVID-19 pandemic.

Goldman’s trading unit reported a lower profit in the fourth quarter compared to a year earlier as a more stable economy resulted in fewer swings in financial markets.

Its revenue from the global markets business, which houses the trading business and accounts for roughly a third of the bank’s overall revenue, fell 7% to nearly $4 billion, owing to weakness in both equities and fixed income trading.

Compared to a strong year-ago quarter when trading volumes skyrocketed, the bank said equity underwriting revenue fell 8% due to lower income from secondary stock offerings.

While fixed income net revenue remained unchanged from a year earlier at $1.86 billion, equities revenue fell 11%. Net revenues in global markets were also 29% lower than the third quarter of 2021.

Like its rivals, Goldman’s trading slowdown overshadowed a 45% jump in investment banking revenue to $3.80 billion as its top rainmakers raked in record fees from advising on some of the largest mergers, initial public offerings and deals involving special purpose acquisition companies.