NEW YORK (TheStreet) -- Goldman Sachs' (GS) rare third-quarter loss stemmed from a steep decline in the value of its own investment portfolio as equity markets plunged and credit spreads widened during the period.
The investment bank said it made a loss applicable to common shareholders of $428 million or 84 cents per share in the third quarter, compared to $1.74 billion profit or $3.19 per share in the year ago quarter and $1.05 billion or $1.96 per share in the second quarter of 2011.
Revenues came in at $3.58 billion, 51% lower than the second quarter of 2011 and 60% below the year-ago quarter. Trading and investment banking revenues came in expectedly weak on a year-on-year basis, after JPMorgan Chase (JPM) and Citigroup (C) reported disappointing numbers on that front.But Goldman's loss was mainly caused by a significant writedown in its "Investing and lending" segment, which includes investments the firm makes with its own capital in securities, private equity and real estate. The bank is required to "mark-to-market" the securities in its portfolio every quarter, so the segments results are vulnerable to market movements.
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