Goldman Sachs Q3 Profits Exceed Expectations
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Wall Street titan Goldman Sachs brought in $1.5 billion in profits for the third quarter this year, a strong comeback from its rare quarterly loss a year ago.
Goldman Sachs Group, the fifth-largest US bank by assets, reported profit that beat analysts’ estimates on higher underwriting fees and a jump in the value of the firm’s own investments.
Wall Street titan Goldman Sachs brought in $1.5 billion in profits for the third quarter this year, a strong comeback from its rare quarterly loss a year ago.
Goldman Sachs Group, the fifth-largest US bank by assets, reported profit that beat analysts’ estimates on higher underwriting fees and a jump in the value of the firm’s own investments.
The bank reported third-quarter net income of $1.51 billion, or $2.85 per share, compared with a loss of $393 million, or 84 cents, a year earlier, exceeding the consensus of Wall Street analysts surveyed by Thomson Reuters.
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Commenting on the results, David Viniar, Goldman’s chief finance officer said:
[quote] There is still so much political uncertainty out there that is driving markets. A speech by Politician X or Politician Y drives markets up or down as much as any economic situation. In that environment, it is very hard to have conviction and very hard to take risk, both for our clients and for us. [/quote]
Goldman, indeed, reined in its risk-taking appetite this quarter, according to one key measure: Its average daily value at risk – a measure of how much in losses could be suffered in one trading day – dropped to $81 million from $92 million in the second quarter, the lowest level in almost six years.
“This quarter’s performance was generally solid in the context of a still challenging economic environment,” Lloyd C. Blankfein, Goldman’s chairman and chief executive, said in a statement.
Alongside the increase in revenue and profit, Goldman Sachs also more than doubled what it set aside for employee compensation during the quarter.
According to the Wall Street Journal, Goldman has set aside 15 percent more in compensation per employee so far this year, even as it cuts staff, a move that suggests efforts to reward talent while the company retrenches in a tough environment.
The Journal said:
[quote] The securities firm, known for rewarding its bankers and traders with the highest payouts on Wall Street, has allocated $11 billion in compensation and benefits for the first nine months of 2012, up 10 percent from $10 billion a year earlier. [/quote]
On average, the firm has earmarked $336,442 for its 32,600 employees, up sharply from $292,836, a year earlier. Headcount, however, has fallen by 9 percent, or 3,100 employees since the end of last year, and has contracted by 5 percent, or 1,600 employees, year-to-date.
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