Goldman Sachs trims commodity risk
But revenues improve year on year for Wall Street Bank
Pedestrians walk past Goldman Sachs Group headquarters in New York. Photographer: Jin Lee/Bloomberg
Goldman Sachs trimmed its commodity trading risk in the third quarter from the previous three months, the bank reported today, though revenues improved from a year earlier.
Value-at-Risk (VaR) in commodities stood at $17 million in the third quarter, down from $19 million in the second quarter and $22 million in the third quarter of 2012. The bank said that while net revenues in its Fixed Income, Currencies and Commodities (FICC) business were down 44 per cent compared with the same period last year at $1.25 billion, commodities were one of the few bright spots.
“Fixed Income, Currency and Commodities operated in a challenging environment, which was characterised by economic uncertainty, difficult market-making conditions in certain businesses, and lower levels of activity,” the bank said. “Net revenues in commodities were higher compared with the third quarter of 2012.”
Goldman, typical of Wall Street banks, groups its commodities revenue under the fixed income category in its quarterly earnings and does not break down the sector individually, often leaving VaR as one of its key risk-reward indicators for commodities.
The bank as a whole reported a slight fall in quarterly profit as weak bond-trading volumes hit revenue in the Wall Street bank’s biggest business. (Reuters)