Goldman's Profit Outlook Slashed
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Reuters reports that Moszkowski has now 'slashed' his third-quarter earnings estimates on Goldman, saying that 'we feel that GS's leverage to global equity markets and principal businesses will prove a fairly significant headwind'. Moszkowski, who has reduced his earnings estimate to $2.8 from $4.28 (he still rates the firm a 'buy'), also says that Goldman's revenues from its hedge fund clients are likely to have fallen as clients may have pulled back on risk exposures in the third period.
The Wall Street Journal reports that, despite navigating through the credit crunch more adeptly than rivals like Citi and UBS, one worrying feature of HSBC's second-quarter performance (the firm's net profit came in at $7.7bn after it set aside $10.1bn in writedowns and loan provisions) is its return on invested capital. Falling to 12% in the first-half (it was 18.4% for the same period last year), this underlines that the investments the bank has made in Asia have thus-far not produced the kind of returns required to offset its problems in the US and the slowdown in Europe.
The Financial Times reports that French bank BNP Paribas has posted a 34% fall in second-quarter earnings. Net profit came in at $2.33bn, after $838m in writedowns and risk provisions linked to bond insurers. Pretax profit at the bank's securities division fell to $809m from $1.88bn in the same period last year.
Finally, Bloomberg reports that Commerzbank's second-quarter profit rose 6.4% to $1.27bn, after a $597m tax gain. The bank wrotedown the value of investments by $650m in the period, including $263m which was related to US subprime lending.
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