New York-based investment banking giant Goldman Sachs saw profit more than halve in the last three months after it was hit by legal costs relating to settlements over potential mortgage mis-selling in the run up to the financial crisis. But fellow US banking group Citi posted its highest quarterly profit in eight years thanks to lower legal costs and savings across the group. Goldman reported net income of $916million (£587million) in the three months to the end of June – down 53 per cent from $1.95bn last year. It said this was because it has set aside $1.45billion for legal costs connected to house repossessions and regulatory matters. Profit fall: But if it wasn't for legal costs, Goldman Sachs would have beaten analysts' expectations However, if these charges are excluded, Goldman Sachs would have beaten analysts’ expectations, with revenue from its investment banking division jumping 1 per cent to $2billion (£1.3billion) as it benefited from a surge in corporate deal-making. Revenue at the bank's investment management arm also rose in the second quarter, up 14 per cent from a year earlier. ‘We are pleased with our performance for the quarter,’ said Lloyd Blankfein, chairman and chief executive. ‘While uncertainty in the EU weighed on investors’ level of conviction, many of our businesses continued to benefit from generally improving economic conditions and healthy client activity.’ Goldman Sachs, which employs over 5,000 people in the UK, said it had paid its staff $3.81billion for the second quarter of 2015, including bonuses and salaries. It now employs nearly 35,000 people worldwide - an increase of about 2,500 people compared to last year. Shares in the group were down 1 per cent in morning trading on the New York stock exchange. But shares in Citi were 3 per cent higher after the US banking giant said it earned $4.9billion in the second quarter as it cut expenses across the board. This is sharply higher than the $181million it earned a year earlier when it was knocked by a mammoth legal settlement with regulators. The group's second-quarter profits were effectively wiped out last year after the bank recorded $3.8billion in costs related to settling charges over its role in the US housing bubble and subsequent financial crisis. Citi said it set aside $11billion in pay and bonuses for its 237,000 staff worldwide in the first half of the year, down 9 per cent on a year earlier. Overall half-year earnings more than doubled to $9.6 billion from $4.1billion a year ago. Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
Goldman Sachs - 2Q net profit of $916mn, down 53%, due to weak bond trading and higher legal costs.