One of the biggest investment banks on Wall Street, Goldman Sachs, has announced a write-down of $2bn due to bad loans.
Meanwhile, Lehman Brothers saw a significant fall in profits, despite results for the first quarter of 2008 exceeding analysts' expectations.
Wall Street had feared poor results from either firm could result in a knock-down sale, as happened at the weekend to Bear Stearns which was bought for $2 per share by JP Morgan Chase after it was forced to seek a loan from the Federal Reserve.
Today, Goldman Sachs reported losses of $1bn on mortgage loans and securities, and a further $1bn from non-investment grade loans, for the three months to the end of February.
Profits for the bank fell 53% to $1.51bn for the quarter, but again this was significantly better than many analysts had forecast.
Meanwhile, Lehman Brothers’ chief executive Richard Fuld will be able to breathe a sigh of relief as many had feared the bank was structured in a very similar way to Bear Stearns.
Lehman’s profits fell by more than half to $489m, paying out $0.81 per share, considerably higher than analysts predictions of $0.72 per share.
Commenting on the results, Fuld says: “In what remains a challenging operating environment, our results reflect the value of our continued commitment to building a diversified platform and our focus on managing risk and maintaining a strong capital and liquidity position.
“This strategy has allowed us to support our clients through these difficult and volatile markets, while continuing to build and strengthen our global franchise for our shareholders.”
The outcome is better than some commentators had feared, but the effects the credit crunch is having on major Wall Street players continued to cause concern.
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