Goldman profit misses estimates on weak underwriting, M&A

[October 15, 2019]   (Reuters) - Goldman Sachs Group Inc <GS.N> missed Wall Street estimates for quarterly profit on Tuesday, hit by lower fees from advising on deals and weakness in underwriting.

Revenue at three of its four major businesses fell, led by declines in investment banking due to fewer M&As and IPOs.

At the bank's investing and lending division, where it invests its own balance sheet, net revenue from equity securities fell 40% from last year to $662 million.

Last quarter, Goldman benefited from investments in several star IPOs, including Tradeweb Markets Inc, Avantor Inc <AVTR.N>, Uber Technologies Inc <UBER.N> and Headhunter Group Plc <HHR.O>, which together made up 55 percent of the bank's public investment portfolio.

Wall Street's biggest banks are facing several challenges in growing their revenue, largely due to the ongoing U.S.-China trade war and concerns about further interest rate cuts by the U.S. Federal Reserve.

Under Chief Executive Officer David Solomon, Goldman has undertaken a major shift in strategy from its focus on trading to building a bigger consumer business in a bid to shield its revenue from wild swings in financial markets.

Goldman, which recently launched a credit card with Apple, has also attempted to build out new businesses, but top executives at the bank have warned in previous quarters that those efforts will take time to bear fruit.

The bank's net earnings applicable to common shareholders fell 27% to $1.79 billion in the quarter ended Sept. 30 from $2.45 billion a year ago. Earnings per share fell to $4.79 from $6.28 a year earlier.

Total net revenue fell 6% to $8.32 billion.

Analysts on average had expected earnings of $4.81 per share and revenue of $8.31 billion, according to the IBES estimate from Refinitiv.

Expectations from most brokerages tracking the investment bank were generally muted as macroeconomic conditions have been weighing on investor sentiment.

Goldman's main rival Morgan Stanley <MS.N> is expected to report quarterly results on Thursday.

(Reporting by Anirban Sen in Bangalore and Elizabeth Dilts in New York; Editing by Saumyadeb Chakrabarty)

[© 2019 Thomson Reuters. All rights reserved.]

Copyright 2019 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.