Goldman Sachs To Report Record Profits In Face Of Credit Crunch
by Stewart Douglas
Goldman Sachs is expected to announce record profits for the 2007 year, in spite of the credit market turmoil that has sent so many of its competitors into hot water over the last few months.
The world’s largest investment firm (in terms of market value) reported earnings for the third quarter that were beyond 78% up on the previous quarter reflecting strengthening performance from its existing private asset management strategies.
The overall total revenue figure through the third quarter saw earnings up to just under $3 billion, in the face of strong losses across the board for the competition, including some of the more respected names in investment banking.
Merrill Lynch, UBS and Bear Stearns have all suffered significant losses as a result of over exposure to the sub-prime sector which has led to a perceived downturn in the investment banking sector over the course of the summer, particularly with share trading strongly down across the board as a result of a potential US recession and further problems in the banking and finance sectors globally.
Furthermore with credit becoming more of a premium commodity banks have been less willing to lend or finance corporate acquisitions, which would only serve to further stagnate the marketplace, their revival looks far from certain in the immediate future.
Many analysts have attributed the success of Goldman Sachs to the fact that it runs its business in the same way as hedge funds are traditionally run, attracting investment from private sources to manage and administer subsequently the proceeds of those investment strategies.
As compared to other firms which operate with more rigid structured agreements, this has allowed Goldman to establish itself as going against the grain to provide sustainable, manageable investment opportunities throughout the credit crunch environment and recent market turmoil.
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