Boston, MA 10/18/2013 (wallstreetpr) – Goldman Sachs Group Inc (NYSE:GS) reported a drop in its bond-trading in the Q3 and employee compensation costs were also slashed by 35%. This particular step has raised some concerns about the performance of the bank, for the rest of 2013. One of the firm’s biggest businesses is the trading of fixed-income commodity and currency products for its clients. There was a massive 47% drop in this segment in the quarter said Goldman Sachs Group Inc (NYSE:GS) on Thursday.
The Federal Reserve effect
There was a volume drop in client trading right across Wall Street even as news of the Federal Reserve curtailing any change in its bond buying policy came in. This was enough of a reason for investors to cut back on trading. However, Goldman Sachs Group Inc (NYSE:GS) was impacted more than its peers. This was primarily because Goldman Sachs Group Inc (NYSE:GS) has an expansive mortgage bond trading business. A year ago, this was at peak levels but the last quarter has been a very weak one.
Time for a strategy change?
Goldman Sachs Group Inc (NYSE:GS) also has numerous institutional clients like hedge-funds who trade more often. The government shutdown affected business from that segment as well as they generally trade on the data that is released by the government. This is one factor that had a negative impact on Goldman Sachs Group Inc (NYSE:GS) towards the end of the Q3 and at the outset of the Q4. In comparison, competitors like Bank of America are able to weather the storm a little better as they have a broader base of clients.
On a conference call, Harvey Schwartz, Goldman Sachs Group Inc (NYSE:GS)’s Chief Financial Officer said that they had a very tough quarter and that the management is unhappy with the performance of the bank.
