American investment banking giant Goldman Sachs Group Inc. will report its first-quarter earnings before markets open Tuesday. Analysts expect the company to report earnings of $2.45 a share, down from $5.94 a share it earned in the first quarter of 2015.
The bank, which recently agreed to pay out over $5 billion to settle allegations related to the sale of subprime mortgage to investors between 2005 and 2007, is also forecast to report a 36.6 percent year-on-year drop in revenue, to $6.73 billion in the first three months of 2016 from $10.6 billion.
Goldman's pretax profit is also expected to take a hit and is likely to drop to $1.87 billion from $3.93 billion in the first quarter of 2015.
Goldman’s investment banking unit, much like its rivals JPMorgan Chase, Citigroup and Bank of America, has been hurt in recent month by the near-simultaneous decline in bonds, stocks and oil prices, and low interest rates in the U.S. Although the first quarter is normally a good one for investment banks, as it marks the time when institutional investors set up trades for the year ahead, this year has been an exception.
On Monday, Morgan Stanley, for instance, reported a 54.4 percent drop in earnings for the quarter ending March 31. Earlier, Bank of America and Citigroup posted a 13 percent and 27 percent year-on-year drop in net income, respectively, pointing to an underlying sluggishness in global markets.
On Monday, shares of Goldman Sachs closed up 0.18 percent. So far this year, the company’s shares have dropped 12.6 percent, underperforming the broad market index.