Tags: goldman sachs | earnings | profit | legal costs

Goldman Sachs Second-Quarter Profit Drops on Higher Legal Costs

Thursday, 16 Jul 2015 08:00 AM

Goldman Sachs Group Inc. reported second-quarter earnings that fell 49 percent from a year earlier on higher legal costs tied to a potential settlement of mortgage-related probes.

Net income dropped to $1.05 billion, or $1.98 a share, from $2.04 billion, or $4.10, a year earlier, the New York-based company said Thursday in a statement. Excluding the legal costs, earnings were $4.75 a share, beating the $3.96 average estimate of 24 analysts in a Bloomberg survey.

Goldman Sachs set aside $1.45 billion for litigation and regulatory proceedings this quarter, about five times more than a year earlier. The firm is in talks to be the latest major bank to settle a Justice Department probe into sales of mortgage securities before the financial crisis.

JPMorgan Chase & Co. said Tuesday that fixed-income revenue fell 21 percent from a year earlier, with about half the decline caused by selling trading units. Bank of America Corp. on Wednesday reported a 9.3 percent drop for the business. Both firms reported at least a 13 percent jump in equities-trading revenue.

Goldman Sachs rose 0.4 percent to $212.96 in New York trading Wednesday. The stock has climbed 9.9 percent this year.

Goldman Sachs has leaned on revenue gains in investment banking and asset management to cushion the decline from trading, which last year posted the lowest revenue since 2005.

Stock Sales

Goldman Sachs held the top spot among arrangers of global equity, equity-linked and rights offerings for the first half of this year, according to data compiled by Bloomberg. It also ranked first in advising on announced mergers and acquisitions and fifth in underwriting U.S. corporate bonds, the data show.

The firm announced two acquisitions of asset-management businesses since the start of the second quarter. The co-heads of that unit, Timothy O’Neill and Eric Lane, said earlier this year that annual growth will remain above 10 percent in the next few years as more investors shift to actively managed funds and the firm lends more to wealthy individuals.

The bank has held talks with the U.S. Justice Department over a $2 billion to $3 billion settlement of a probe into its sales of mortgage bonds leading up to the financial crisis, a person with direct knowledge of the situation said last month. Goldman Sachs set aside $944 million for litigation and regulatory proceedings in the five quarters ended in March.


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Goldman Sachs Group Inc. reported second-quarter earnings that fell 49 percent from a year earlier on higher legal costs tied to a potential settlement of mortgage-related probes.
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2015-00-16
Thursday, 16 Jul 2015 08:00 AM
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