Quarterly revenue fell, but the investment bank managed to boost its earnings through huge cost cuts. Fred Katayama reports.
Goldman Sachs' quarterly profit soared 74 percent - a stark contrast to shrinking bottom lines at its rivals. But revenue actually fell, so the bank managed to boost its earnings through cost cuts. That includes a huge 40 percent drop in expenses compared to the same quarter last year. That's when Goldman set aside more than $1 billion to cover potential mortgage securities settlements with the government. It also cut staff and lowered compensation costs. Like its peers, trading revenue from currencies, fixed income and commodities rose sharply. But those gains were partly offset by lower revenue in mortgages. And investment banking revenue tumbled, hurt by weakness in its financial advisory and equity underwriting businesses. KBW analyst Brian Kleinhanzl said, "We had high expectations for trading that Goldman Sachs missed, but overall trading was in line with the consensus estimate, so it's hard for us to knock trading this quarter." Goldman's profit and revenue easily beat Wall Street's targets, but its shares edged lower in early trading.