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DynastyRG
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Goldman Sachs Group Inc. said Thursday that it swung to a fourth-quarter profit that topped analyst estimates as lower-than-expected compensation levels boosted the bottom line, while performance at its various businesses was mostly in line with expectations.
Goldman’s fourth-quarter net income was $4.95 billion, or $8.20 a share, on revenue of $9.62 billion. In the year-ago quarter, which ended in November 2008, Goldman lost $2.12 billion, or $4.97 a share.
On average, analysts polled by Thomson Reuters had expected the firm to earn $5.20 a share on $9.65 billion of revenue.
Shares of Goldman rose 1.5% to $170.39.
Barclays Capital analysts told clients in a Thursday research report that the better-than-expected earnings were “driven entirely by an unexpected negative compensation accrual, negative $500 million, versus our $2.9 billion estimate, and an associated charitable donation.”
“Key questions,” the analysts said, “include a look at capital markets activity early in first quarter 2010, and how we should think about the permanence, or likely lack thereof, of Goldman Sachs’ very low comp ratio going forward.”
Goldman also said compensation and benefits expenses were $16.19 billion in 2009, or 35.8% of net revenue. The ratio fell from 48% in 2008 to the lowest level in the company’s history, Goldman said.
The Wall Street firm, which has faced public anger over recording big profits after accepting bailout funds, said total compensation and benefits have decreased by $4 billion, or 20%, since 2007.
In the fourth quarter, compensation was reduced by $500 million to fund a charitable contribution, Goldman said Thursday.
Total underwriting fees at the investment bank climbed to $962 million from $460 million a year earlier.
“Despite significant economic headwinds, we are seeing signs of growth and remain focused on supporting that growth by helping companies raise capital and manage their risks, by providing liquidity to markets and investing for our clients,” Chief Executive Lloyd Blankfein said in a press release.
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