Slowdown knocks Goldman profits

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Investment bank Goldman Sachs has reported an 11% fall in quarterly profit as banking activity slowed amid the global credit crunch.

It reported net income of $2.09bn (£1.1bn) in the three months to 30 May, down from $2.33bn a year ago.

While its business has slowed, Goldman has avoided the massive losses the credit crisis has inflicted on rivals such as Lehman Brothers.

The results beat analysts' expectations and boosted the company's share price.

"Given the difficult market conditions, we are particularly pleased to report strong results for the second quarter," said Goldman's chairman and chief executive Lloyd C. Blankfein.

'Uncanny ability'

Unlike many investment banks, Goldman bet correctly that the value of mortgage bonds would go down, helping it avoid the fallout from the collapse in the US sub-prime mortgage market.

However, the credit crunch triggered by the sub-prime meltdown has resulted in fewer buyouts and share flotations that are the mainstay of investment banking.

"They [Goldman Sachs] have an uncanny ability to stay out of trouble," said Thomas Russo, partner and portfolio manager at Gardner, Russo & Gardner.

"One defence against trouble is corporate culture, and Goldman has shown they have retained a highly unusual degree of discipline in their culture," he added.

On Monday, Lehman Brothers reported a quarterly loss of $2.8bn - the first the bank had reported since it went public in 1994

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