(Reuters) – Goldman Sachs Group Inc.’s management team looks for ways to revive commercial banking bonds and generate more revenue from existing clients that have become less profitable for the bank.
The Wall Street bank reported a 40 percent drop in second-quarter revenue bonuses on Tuesday, had expected worse than many analysts and posted weaker results on the amenities of its history as a public company.
Seven analysts toasted Marty Chavez CFO during a conference call on whether Goldman is enough to transform the company.
“Everyone in our FICC business focused on it, and on a granular molecular level, working – as in the management team,” he said, using an acronym for trading in fixed income, foreign exchange and commodities.
The company has delivered $ 1.2 billion in revenue, the lowest figure since the fourth quarter of 2015.
Goldman’s trade defeat was deeper than the general weakness that hit Wall Street because of historically low volatility.
Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co fell 6 percent to 19 percent.
Morgan Stanley will report on Wednesday.
Goldman shares fell 2.5 percent even though they have managed to beat global forecasts of analysts’ earnings.
Shares were the worst stocks of major US banks, losing 4.3 percent this year compared to Monday’s close, compared with a 6.7 percent increase for the S & P 500 financial .
Goldman declined in most areas of bond swaps, including interest rates and currency, but commodity trading has been the worst case scenario, Chavez said.
The bank does not exclude figures for each commodity, but Chavez said raw materials had the worst performance in the 73 quarters in which Goldman reported publicly gains.
Many of Goldman’s clients are active asset managers, such as hedge funds, who have struggled to a large extent to show attractive returns and prevent investors from moving to passive vehicles such as index funds and quoted funds.
These customers are trading less and therefore have generated less revenue for the Goldman Sachs bank. They do not trade both corporate clients than their larger competitors who have lent large companies and managed their hedges.
Goldman has also traditionally been more focused on derivatives and amenities than other banks, and both areas were weak in the second quarter, Chavez said.
Oil prices fluctuated between $ 44 and $ 58 a barrel in the first half of 2017, in sharp contrast to the first half of 2016, ranging from $ 27 to $ 50 a barrel.
Volatility indexes also reached multiyear levels in the first half of 2017, which means that traders have fewer options for directional paris.
To improve overall trading obligations, Goldman looks for ways to do more business with existing customers, Chavez said.
“This is something that all of us evaluate and make changes and works, and we are committed to it,” he said. “We know we have to do better.”
Goldman has maintained its commitment to its products unit J. Aron & Company, while fellows such as Morgan Stanley and Barclays PLC have declined in recent years.