REUTERS - Goldman Sachs Group Inc's (NYS:GS - News) third-quarter profit fell 2 percent as weak bond-trading volumes hit revenue in its biggest business, pushing down the bank's shares in premarket trade.
Revenue from Goldman's fixed income, currency and commodities (FICC) business, which undertakes trading for clients, fell 44 percent to $1.25 billion in the quarter ended September 30.
The fifth-largest U.S. bank by assets reported a profit of $1.43 billion, or $2.88 per share, beating the average analyst estimate of $2.43, according to Thomson Reuters I/B/E/S.
In the year-earlier period, the bank earned $1.46 billion, or $2.85 per share.
Goldman's shares fell 2.5 percent to $158.23 in premarket trading despite the stronger-than-expected earnings and an increase in quarterly dividend to 55 cents per share from 50.
"The third quarter's results reflected a period of slow client activity," Chairman and Chief Executive Lloyd Blankfein said in a statement.
Fixed-income trading was muted for several weeks leading up to the Federal Reserve's meeting in mid-September amid speculation that the central bank was about to start winding down its bond-buying stimulus program.
Goldman was not the only Wall Street bank to be stung by weak fixed-income trading. However, it is more reliant on trading income than its bigger rivals, which have significant consumer banking operations.
JPMorgan Chase & Co's (NYS:JPM - News) trading revenue fell 8 percent in the latest quarter, while Citigroup Inc's (NYS:C) dropped 26 percent and Bank of America Corp's (NYS:BAC - News) about 20 percent.
Revenue from Goldman's own investments also fell. Revenue from loans and principal investments slid 18 percent to $1.48 billion.
Equity trading revenue dropped 18 percent to $1.62 billion, while investment banking advisory revenue slid 17 percent to $423 million. However, underwriting revenue rose 13 percent $743 million.
(Reporting by Lauren Tara LaCapra in New York and Tanya Agrawal in Bangalore; Editing by Ted Kerr)