Sept. 22 (Bloomberg) -- Goldman Sachs Group Inc. will probably report a third-quarter loss as market tumult prevents the bank from generating a profit for only the second time in 12 years as a public company, Barclays Capital analysts estimated.
Goldman Sachs may lose 35 cents a share in the three months ended Sept. 30, down from a prior estimate of $2.40 in earnings per share, the analysts, led by Roger Freeman, said in a note to clients today. They cut their earnings-per-share estimate for Morgan Stanley to 12 cents from 43 cents.
Declines in asset prices will cause losses on some of Goldman Sachs’s principal investments, which include stakes in companies and real estate, the analysts wrote. Trading revenue and investment banking fees have also been reduced amid falling equity and credit markets and concerns that the European sovereign debt crisis is worsening.
“Nearly every line is being marked down from our prior forecasts, which were not particularly optimistic to begin with,” the analysts wrote. “Some revenue lines are being reduced by more than half and, due to the equity- and debt- market decline, we are now incorporating large principal investment losses.”
Goldman Sachs was the most profitable U.S. securities firm in Wall Street history before converting to a bank in September 2008 after the collapse of smaller rival Lehman Brothers Holdings Inc. The fourth quarter of 2008 was the only time since Goldman Sachs went public in 1999 that the firm has reported a quarterly loss. Morgan Stanley, which was the second-biggest securities firm after Goldman Sachs, also converted to a bank in 2008 and has expanded its retail brokerage business.
Goldman Sachs fell $5.28, or 5.4 percent, to $92.58, at 12:08 p.m. in New York Stock Exchange composite trading, the lowest level since March 2009. Morgan Stanley fell $1.16, or 8.4 percent, to $12.66, the lowest level since December 2008.
The two companies are dropping amid an overall decline in U.S. financial stocks, with the Standard & Poor’s 500 Financials Index declining 3.4 percent. Moody’s Investors Service yesterday lowered long-term credit ratings on Bank of America Corp. and Wells Fargo & Co. and reduced Citigroup Inc.’s short-term rating.
Barclays Capital is the investment-banking unit of Barclays Plc, Britain’s second-largest bank by assets.
--Editors: David Scheer, William Ahearn
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