Economy

Goldman fixed-income trading to stay challenged in third quarter: Schwartz

Goldman fixed-income trading to stay challenged in third quarter: Schwartz”

(GS), the Wall Street firm, unveiled a plan to boost revenue in its struggling bond-trading division by $1 billion within three years, while signaling there's little hope of a quick pickup in now listless global markets.

The growth initiative, which is not dependent on an overall improvement in the market environment, can be realized in the next three years and could contribute up to $2.5 billion in pre-tax earnings, Goldman president Harvey Schwartz said during a Barclays Group PLC financials conference in NY.

But he added that Goldman can lift annual FICC revenue by $1 billion, financing and lending revenue by $2 billion, investment management revenue by $1 billion, investment banking by $500 million, and equities client coverage by $500 million. The additional $5 billion at the top line should add $2.5 billion to pretax earnings. These plans could add $1 billion in revenue to Goldman each year, Schwartz said. In the second quarter, Goldman reported a 40 percent drop inbond trading revenue and the weakest commodities results in its history as a public company.The company is taking steps to grow its fixed income trading business, including courting a greater number of asset managers and banks to trade with the firm and expanding its footprint with corporate clients.

Goldman Sachs shares gained 2.4% to $226.30 in trading Tuesday, trimming the year-to-date slide to 5.5%. On average, large US bank stocks have gained 1.4% in 2017.

IBD'S TAKE: Read IBD's The Big Picture column each day to stay on top of the market direction, a key indicator that lets you know when you can be aggressive and when you should move to the sidelines. "The market environment in the third quarter feels like thefirst and second quarter", Schwartz said.



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