The Goldman Sachs Group Inc. on Tuesday, July 20, reported net earnings of $613 million for second-quarter 2010, an 82% drop from quarterly earnings a year ago, at $3.44 billion. Earnings per common share were posted at 78 cents versus $4.93, 84% lower.
In explaining the largest decline in earnings since the deep recession days of 2008, company officials cited the impact of a $550 million settlement with the Securities and Exchange Commission, a $600 million U.K. bank payroll tax on bonuses paid to employees, and lower revenues in investment banking and trading.
Goldman’s total net revenues for the quarter posted at $8.84 billion versus $13.76 billion in the year-ago quarter, according to the second-quarter 2010 earnings release.
“The market environment became more difficult during the second quarter and, as a result, client activity across our businesses declined,” said Goldman Chairman and CEO Lloyd Blankfein in the release. “Looking ahead, we remain focused on helping our clients to raise capital, manage risk, and invest for the future, which are all important to economic growth.”
Analysts’ consensus was for net earnings of $1.23 billion, or $2.03 a share, on net revenues of $8.98 billion, according to Thomson Reuters.
Goldman shares (GS) traded upward on Tuesday, ranging from a low of $141.55 per share in the morning to a high of $149.74 by mid-afternoon.
Asset management net revenues were $976 million, 6% higher than the second quarter of 2009, “primarily due to changes in the composition of assets managed,” according to the release. During the second quarter of 2010, assets under management decreased $38 billion to $802 billion due to $24 billion of net outflows primarily reflecting outflows in money market and equity assets, and $14 billion of net market depreciation, primarily reflecting depreciation in equity assets.
A Goldman spokesperson said the bank’s asset management unit comprises mutual funds, institutional investing, private wealth management, and private equity. The bank does not break out the revenue figures in those individual areas when publicly reporting quarterly earnings, the spokesperson said.