A few months ago, Goldman Sachs Group, Inc. (GS-NYSE) - target of a government probe over the issue of mortgage bonds leading up the financial crisis - reported that they raised the top end of its range of "reasonably possible" legal expenses to about $3.8 billion from nearly $3 billion.
On Thursday, Goldman reported net revenue from trading fixed-income securities, currencies and commodities fell 28% to $1.60 billion for the smallest quarterly profit in nearly four years. Revenue fell nearly 1 percent to $9.07 billion.
During Q2, Goldman's net profit attributable to shareholders - more than halved to $916 million or $1.98 per share, from $1.95 billion or $4.10 per share in Q2 of 2014. Provisions reduced earnings by $2.77 per share, the bank said.
Operating expenses for the bank rose 16% to $7.34 billion. Total non-compensation expenses rose 48% to $3.53 billion. Representing 42% of the companies revenue, compensation and benefit costs fell 3% to $3.81 billion. Staff numbers increased 8% to 34,900.
During Q2 of this year, Goldman set aside $1.45 billion for mortgage-related legal costs and regulatory matters - five times as much as in Q2 2014.
Worries over Greece and China put pressure on Goldman's trading business as investors were reluctant to trade. While other banks have shifted away from trading, Goldman executives stress their commitment to trading.
Goldman's trading business once contributed nearly 40% to the banks revenue.
Investment banking revenue for the bank rose 13% to $2.02 billion. This arm of business for the bank includes advising on deals and underwriting debt as well as stock offerings. Higher fees charged by the bank attributed to the revenue.
Contributed by Millennium Traders
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