$ACHS AND THE CITI
GOLDMAN Sachs brought more cheer to the City yesterday as it recorded third-quarter earnings of $3.2bn (£1.97bn), well ahead of analysts’ expectations, thanks to the continued strength of its fixed income operations.
“Although the world continues to face serious economic challenges, we are seeing improving conditions and evidence of stabilisation, even growth, across a number of sectors,” said chief executive Lloyd Blankfein.
As Goldman unveiled its figures, it was already bracing itself for another row over bonuses, after revealing it had set aside $16.7bn for compensation in the first nine months, putting it on track to dole out a record $22bn at the end of the year.
Chief financial officer David Viniar said the company was “cognisant of what’s going on in the world”, but pointed out that Goldman bankers had delivered massive profits, saying “we have to be fair to those people”.
The Wall Street giant is considering making a donation of around $1bn from its compensation pool to charity, in an effort to appease public ire over its bonus payouts.
Group income of $3.19bn was more than three times the $845m earned in the equivalent period last year, with fixed income and equities driving the bank to $12bn in revenues, double that seen in 2008.
Revenue in fixed income, currency and commodity trading (FICC), ballooned to $5.99bn compared to $1.6bn in the last year’s third quarter, while equities revenue reached $2.78bn from $1.56bn.
Principal investments also delivered a strong performance, increasing revenue to $1.26bn from last year’s $453m loss, although the bank lost $66m on real estate investments.
Goldman said the decline in activity in mergers and acquisitions had dented investment banking revenues, which dropped to $899m compared to $1.29bn in 2008.
But despite the decline in activity, the bank retained top spot in worldwide mergers and acquisitions, ranking first in global announced transactions for the year to date.
Goldman’s tier one capital ratio, a key marker of financial strength, was up to 14.5 per cent as of 25 September, from 13.8 per cent at the end of June.
The bank has repaid the $10bn it received in state aid.