Goldman Sachs has golden fourth quarter with $4.78 billion in profits
Goldman Sachs Group Inc. beat the rosy estimates of analysts in the fourth quarter largely by pulling back on the amount it will be giving to its employees.
In an earnings report released this morning, Goldman reported profits of $4.78 billion for the fourth quarter of 2009, compared with $2.28 billion in losses during the final quarter of 2008.
Quarterly profits at the storied investment bank were enough to provide earnings of $8.20 a share, significantly higher than the $5.25 a share that analysts had predicted. Goldman had $13.4 billion in profits for the year.
Revenues at the bank were down from the third quarter in 2009, and Goldman’s stock was down more than 1% in early trading today after the earnings report was released. But the bank upped profits from the third quarter by dramatically cutting the amount it will give to its employees. The firm reduced the pool of money that had been put aside for compensation in previous quarters so that the fourth-quarter compensation figure was a negative $519 million. This negative figure was reached in part by subtracting $500 million that the company gave to its charitable arm, Goldman Sachs Gives. For the year, the company put aside $16.19 billion for its 32,500 employees, enough for $498,153 for each of them.
In a statement, Goldman’s chief executive, Lloyd Blankfein, said the company’s performance and its “recognition of the broader environment resulted in the lowest-ever compensation to net revenues ratio.”
The company has been the center of the public uproar over the enormous bonuses being handed out to American bankers in a year when the government helped them recover from the financial crisis. Goldman received $10 billion from the Troubled Asset Relief Program in 2008 and paid it back in June, freeing it from any government oversight on compensation.
In 2007, Blankfein received the largest compensation package ever given to the head of an American investment bank. The bank’s compensation figures have always looked particularly high because of the small number of employees it has compared with competitors like JPMorgan Chase & Co. and Citigroup Inc. Prior to the earnings report, Goldman had announced that the bonuses of the top 30 executives would be paid in stocks.
