Goldman Sachs reports 70% fall in profit

by Gill Montia

Story link: Goldman Sachs reports 70% fall in profit

Amid chaos on Wall Street, Goldman Sachs, the largest US investment bank, has reported a 70% fall in profit for the third quarter of 2008.

The group posted net profit of $845 million in the three months to the end of August, down from $2.85 billion in the same period of 2007.

Net revenue fell to $6.04 billion from $12.3 billion a year earlier; the bank’s investment banking revenue fell 40%.

According to Reuters, earnings were ahead of expectations at $1.81 a share but revenue fell short of analysts’ forecasts of $6.3 billion.

Writedowns included $275 million on leveraged loans; $500 million on residential mortgages and securities and $325 million on commercial mortgages and securities.

Goldman’s chief executive, Lloyd Blankfein, described the quarter as a challenging one in which the business saw a marked decrease in client activity and declining asset valuations.

The bank is currently working with JPMorgan Chase to organise loans of up to $75 billion for American International Group Inc (AIG), which is reported to have approached the Federal Reserve for a $40 billion injection of cash as Lehman Brothers began its bankruptcy process yesterday.

AIG is the largest insurer in the US and has posted $18 billion in losses over the past three quarters.