8:28 AM
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NEW YORK (Reuters) - Goldman Sachs Group Inc posted a 72 percent decline in quarterly earnings as trading revenue dropped, and the bank cautioned that there were fewer opportunities to make money in the current environment.
The results were stronger than many analysts had expected, but with Goldman sounding cautious notes about its future profits, the bank's shares were little changed.
The largest U.S. investment bank posted a 7 percent decline in revenue; revenue from customer trading, a key source of income, fell 22 percent.
Goldman faces serious pressure from regulatory reform in many of its main businesses. U.S. financial reform laws limit banks' ability to trade for their own account, which is expected to cut into Goldman's trading profit. Regulatory pressure to move many types of derivative trading to exchanges also threatens future earnings.
When the bank posted a 53 percent decline in fourth-quarter profit and talked about how client trading volume in December was "dead," many investors feared it would have real trouble boosting future profits.
On Tuesday, the bank said trading revenue in the first quarter had rebounded 83 percent from the fourth quarter. But on a conference call with investors and analysts, it noted the hurdles it faces in the future.
Goldman's clients are still cautious, given the economic and regulatory environment, and the bank still sees the climate as uncertain, Chief Financial Officer David Viniar said.
The bank posted a profit to common shareholders of $908 million, or $1.56 a share. Analysts' average forecast was 82 cents a share, according to Thomson Reuters I/B/E/S.
Goldman repurchased $5 billion of preferred shares from Warren Buffett's Berkshire Hathaway in the quarter, resulting in a one-time charge of $1.64 billion.
Excluding the preferred share buyback, the bank would have earned $4.38 a share.
A year earlier, it posted earning of $3.3 billion, or $5.59 a share.
Revenue from fixed income, currency and commodities was down 28 percent. Last year's trading results were unusually strong.
Goldman set aside $5.23 billion for employee compensation in the quarter, a 5 percent decline from a year earlier.
The bank's shares were down 39 cents to $153.39 in morning trading on the New York Stock Exchange.
(Reporting by Lauren Tara LaCapra and Dan Wilchins; Additional reporting by Angela Moon; editing by John Wallace)
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