Goldman Sachs Group the Dow Jones Industrial’s worst performer in 2016 reported a drop of 60% in profit, as revenue for the quarter fell to its lowest since Lloyd Blankfein the CEO took the reins in 2006.
Net income at Goldman was down to just over $1.14 billion equal to $2.68 per share, compared to last year during the same quarter of $2.84 billion equal to $5.94 per share.
However, those figures beat the estimates from Wall Street that averaged $2.48 a share, as the company cut its costs far deeper than had been expected.
Revenue at Goldman Sachs fell by 40% to just less than $6.34 billion, which missed the estimate average of $6.69 billion.
CEO Blankfein is attempting to ride a slump out in bond trading that has been compounded due to stiffer regulations and market swings – challenges forcing many of its competitors to scale way back.
Blankfein is going through his biggest push in cost cutting in many years, following suit of his biggest competitors who have turned towards their expenses as the sole lever to pull in weakened revenues.
Goldman Sachs operating expenses were down 29% from the same period one year ago to end the quarter at $4.76 billion, in comparison to analyst’s estimates of $4.99 billion.
Cost reductions by Blankfein discussed by those who have knowledge of his plan will include more layoffs of support staff, less spending by bankers on hotels, airfare and entertainment and less spending on printing pitch brochures and books.
The big question is if cost cutting, either during the first quarter or during a longer period, will be sufficient to satisfy company investors.
Shares were unchanged during premarket trading on Tuesday morning. Goldman Sachs has fallen by 12% during 2016 compared to a decline of 11% for the S&P 500 Financials Index that includes 90 companies.
Analysts cut $1.37 of their estimates per share over the past four weeks due to sentiment souring and other reported earnings for banks that did not meet expectations.