Goldman Sachs Sees Slightly Softer FICC Business Amid Interest Rate Hike

Goldman Sachs' Chief Executive David Solomon expects the bank's fixed-income, currencies, and commodities (FICC) business to be slightly softer in the third quarter compared to a very strong performance for its equities business.

The warning came as the bank's shares fell almost 4% on Wednesday underperforming other bank shares which were also weaker reacting to the Federal Reserve's move to hike interest rates.

Goldman's FICC business has been volatile this year, with net revenue surging 32% in the second quarter from a year earlier but falling 10% in the first quarter when its rates business was hit by volatility from the Iran war.

'We're not particularly surprised,' said Sean Dunlop, banking analyst at Morningstar Research, 'and had underwritten a 12% sequential decline in investment banking revenue and an 11% sequential decline in FICC revenue for Goldman in Q3.'

Goldman Sachs exceeded second-quarter profit expectations as deal-making picked up and market volatility boosted equities revenue to a record.