By Lauren Tara LaCapra
(Reuters) - Goldman Sachs Group Inc said quarterly earnings fell 12 percent as it lost money on an investment in a Chinese bank and other equities, spurring the bank to launch a new round of cost-cutting.
Investment banking revenue also dropped as equity underwriting and merger advisory activity slowed.
The results show the pressure investment banks face as trading volume drops globally and merger activity slows. Goldman cut 100 jobs during the second quarter and trimmed other costs, including compensation and professional fees.
Its investing and lending division suffered $194 million of losses on its investment in shares of Industrial and Commercial Bank of China Ltd (ICBC), and $112 million of losses from other stocks.
Goldman's earnings per share still easily beat analyst expectations, in part because it spent $1.5 billion buying back 14.3 million of its shares during the quarter.
The bank earned $927 million, or $1.78 per share, down 12 percent from $1.052 billion, or $1.85 per share, a year earlier. Analysts' average forecast was $1.16 per share, according to Thomson Reuters I/B/E/S.
Goldman shares were up 2 percent in premarket trading at $99.65.
"I think a lot of the cost-cutting measures are starting to pay off to the bottom line," said Edward Deicke, a registered representative at JHS Capital Advisors.
Goldman's operating expenses fell 8 percent to $5.2 billion. But revenue fell a sharper 9 percent to $6.6 billion.
Overall, its lending and investing division reported an 81 percent decline in net revenue, to $203 million from more than $1 billion a year earlier.
(Reporting By Lauren Tara LaCapra; editing by John Wallace)
