Tomahawk, WI 10/21/2013 (BasicsMedia) – Banking has enjoyed a golden age up to this point, which it may struggle to attain in future. If you look at what banks enjoyed in the past, and compare these with the current situation, you will notice that a lot has changed. Most banks are yet to recover from the global financial crisis of 2008 to 2009. Banks are now uncertain about what their prospects are bearing in mind the recent U.S government shutdown. These are the conditions that Goldman Sachs Group Inc (NYSE:GS) has to contend with as it seeks to continue on a path of profitability in future.

Banks’ Golden Age May be Over

While almost everyone agrees that the golden age of banking will be impossible to replicate, one cannot deny that banks such as GS are on the forefront in leading its renaissance. The bank is often used to check the pulse of various economies around the globe because it managed to come out of the recent global financial crisis relatively unscathed. Last year, at a time such as this, GS reported revenue of $8.35 billion. This year, GS’ revenue stands at $6.72 billion for the last three months. While this is a drop, it is worth pointing that the results beat analysts’ expectations.

Factors Responsible for GS’ Poor Financial Performance

GS has pointed out two reasons that created this scenario, where its revenues fell and profits remained flat. The first reason is that trading in bonds experienced a slowing down, and this ended up interfering with the bank’s financials. The second reason issued by Goldman Sachs is that trading in securities also slowed down. The bank paid dividends on preferred shares and still managed to remain with $1.43 billion. This could be high but it is a drop from the $1.46 billion Goldman Sachs earned after paying dividends on preferred shares in the same quarter in 2013.

Goldman Sachs is one of the banks that trade in mortgage securities. Almost all major banks in the U.S have reported poor performances in their mortgage divisions, and GS is not exempt from this bad period. Its currencies trade division did not fair any better, and this ended up messing up with the bank’s revenue and overall profits. Other large banks have already shown that this has not been a very good quarter financially for all of them. Banks such as Citigroup, JPMorgan Chase & Co, as well as Wells Fargo, reported weaker results than what was expected of them.

The banks can turn this situation around if mortgages divisions pick up. The fact that they are abandoning high-risk businesses and putting their focus on wealth management, as well as other stable or less-risky businesses, can help banks such as GS to report profits and increase in revenue. The U.S government shutdown affected these banks, but since this is not a long-term situation, I foresee them improving their financial results in the fourth quarter of 2013. Banks may not enjoy similar profits and revenues of the past years, but the industry is on a renaissance.

GS will continue playing an important role in the banking sector and financial sector, and being the underwriter of the Twitter Inc IPO, will help it towards achieving this goal.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.