Top Wall Street firm Goldman Sachs today reported a 43 per cent decline in quarterly profits on plummeting investment banking and stock trading revenues, and said the World Trade Center attacks would weaken short-term operating conditions.
Rival firm Morgan Stanley last week warned of an increasingly bleak environment for investment banking when it reported a 41-per cent decline in quarterly earnings.
Goldman said its liquidity, overall financial condition and facilities were not materially affected by the attacks.
Companies have been averse to merger deals and selling stock, two activities that carry fat banking fees. Goldman, which returned to its lower Manhattan headquarters soon after the attacks, also booked a large loss on its portfolio as investments in technology and telecommunications companies dropped in value.
Goldman posted earnings of $468 million, or 87 cents a share, for the fiscal third quarter ended August 31st. That compared with a profit of $824 million, or $1.62 a share, a year ago.
Investment banking revenues fell 17 per cent to $1.10 billion, mostly due to a drop-off in stock underwriting activity. Trading and principal investments revenue fell to $1.24 billion from $2.12 billion a year ago, reflecting a decline in stock trading activity.
Goldman shares closed at $70.03 yesterday trading on the New York Stock Exchange. The shares are down 33 per cent since the beginning of the year, roughly in line with a 34-per cent drop in the banking sector.