Goldman Sachs reports 70% profit slump down to £454m

Updated: 10:37 EST, 16 September 2008

Goldman Sachs today belatedly joined the melée in the financial markets, reporting a 70% slump in profits.

The US investment bank’s third-quarter profits were $810 million (£454 million), a meagre return by its standards.

Goldman seemed until now to have had a magic touch, avoiding the credit crunch and subprime mortgage crisis with nimble dealings that aroused both jealousy and conspiracy theories.

Chairman and chief executive Lloyd Blankfein said: 'This was a challenging quarter as we saw a marked decrease in client activity and declining asset valuations.'

Investors were spooked by his remarks, and are nervous about what Goldman’s arch-rival, Morgan Stanley, has in store.

Goldman shares fell 12% to $119 in New York.

The profits compare with $2.8 billion in the same period a year ago, but still beat Wall Street expectations.

The results are the worst Goldman quarterly figures since it joined the stock market in 1999.