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Goldman Sachs’ Profits Hurt by Litigation Costs
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Goldman Sachs

Summary: While legal costs have hurt their profits, Goldman Sachs’ overall profits are up from a year ago.

Goldman Sachs has seen a big cut to their profits as the bank sets aside $1.45 billion for pending mortgage-related litigation and matters. Their earnings during the second quarter were reduced by almost half.

  
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The markets are tough and they are dealing with investigations from the financial crisis. They announced that they are close to a deal with the Justice Department for their sale of mortgage-backed securities prior to the financial crisis. Other similar cases involving other banks have been settled by now.

Usually a good source of profit for Goldman is there trading desks but that is seeing a decline as well. Their fixed-income trading revenue was down 49 percent from their first quarter numbers. They believe the issue of Greece pulling out of the euro is a major factor for the smaller numbers. With that matter close to being resolved, the bank hopes to see numbers start increasing as mergers and acquisitions pick back up. Currently, revenue from M&A is down 15 percent from the first quarter.

The bank still earned a profit of $1 billion this year. With their additional $1.45 million set aside, they actually earned more than last year. Their overall revenue did better than what analysts predicted at $8.8 billion. The bank reported revenue of $9.1 billion.

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Source: http://www.nytimes.com/2015/07/17/business/dealbook/litigation-costs-drag-down-goldman-sachss-earnings.html?_r=0

Photo: vrsteel.com





 

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