Lloyd lost ‘cred’ in sluggish bond unit
Lloyd Blankfein left Goldman Sachs with a mixed bag.
The bank powerhouse on reported a surprisingly strong profit increase of 19 percent in the third quarter, driven by tax cuts and investment-banking gains. But Goldman’s bond-trading division reported a 10 percent drop, worse than the hit taken by rivals.
The results mark a final, sour note for Blankfein, whose 12-year tenure as chief executive has been dogged in recent years by persistently weak results in bond, currency and commodity trading, known as FICC, historically a key business for Goldman.
Low volatility has contributed to the fiveyear slump, which has dragged on since 2013, but the downturn under Blankfein has been deeper than its rivals.
“Part of it is the mix of Goldman Sachs’ FICC business,” Brian Kleinhanzl, an analyst at KBW, told The Post. “GS is still weighted more toward credit and that was called out as weaker this quarter.”
The third-quarter decline leaves that business as the third-smallest segment at the bank, contributing about 15 percent of profit, when it had once driven more than a third, according to company reports.
Meanwhile, strength at the company’s investment-banking unit, a division closely associated with the new CEO and part-time DJ, David Solomon, helped deliver Goldman’s $2.52 billion in quarterly earnings. Shares rose 3 percent, to $221.70. Meanwhile, archrival Morgan Stanley posted a 20 percent spike in profit, to $2.1 billion, on strong bond trading and investment management.