Goldman Sachs Group Inc. reported a third-quarter loss of $428 million Tuesday, only the second quarterly loss since the investment bank went public 12 years ago.
Revenue from underwriting stocks and bonds plunged as businesses, unnerved by political wrangling in Washington and volatile markets, held off on new stock and bond offerings. Goldman also lost nearly $3 billion on investments in stocks, bonds and a stake in a Chinese bank.
Investors were unfazed by the loss, which had been widely expected due to the turmoil in financial markets this summer.
Goldman's stock was up 2 percent to $98.88 at noon Eastern.
UBS analyst Brennan Hawken said the stock, which had fallen from about $128 since second-quarter earnings were reported three months ago, had already priced in the impact of the dismal third-quarter results.
"Well, we were braced for impact and we got it," Nomura analyst Glenn Schorr wrote in a note to clients. Schorr noted that Goldman was the bank most exposed to declines in global assets like stocks and bonds.
Goldman's chief financial officer, David Viniar, attributed the weak results to volatile markets and the weakness of European banks.
"Last week, big market rally; yesterday, big market decline," Viniar said on a conference call. "So I think there's still a lot of uncertainty and a lot based on who says what on what day."
The bank has been cutting expenses to shore up cash and said in July that it would eliminate as many as 1,000 jobs. Tuesday it said had 34,200 employees, down 1,300 from the previous quarter. Some of those cuts came from the bank's sale of the Litton Loan Servicing Unit.
The latest loss was equivalent to 84 cents per share. The bank earned $1.7 billion, or $2.98 per share, in the same period a year ago. Revenue slumped 60 percent to $3.6 billion, missing analysts' estimates.
Investment banking had been a bright spot in Goldman's previous quarter, but a sharp slowdown in stock and bond offerings led to a 61 percent plunge in underwriting revenue.
Revenue from bond and currency trading, a major moneymaker for Goldman, recovered slightly from a dismal performance in the second quarter but was still down 36 percent from a year ago.
Goldman's investment and lending unit lost $1.1 billion on its stake in the Industrial and Commercial Bank of China, $1 billion on other stock holdings and $907 million on bonds and loans.
Goldman has done better than most big banks throughout the crisis and its aftermath, though it's also been one of the most maligned. The storied investment bank, which like its peers packaged and sold risky mortgage-backed securities before the financial crisis took hold, has been through investigations, fines and other headaches. In the third quarter the bank set aside $59 million for litigation and regulatory proceedings.
Banking is becoming smaller, simpler and less profitable, as the government clamps down on many of the kinds of business that drove outsized profits, and risky balance sheets, prior to the financial crisis.
Goldman, which has been public for 12 years, has recorded only one other quarterly loss since then, at the end of 2008 at the height of the financial crisis.
Copyright 2011 The Associated Press.