STOCK MARKET WATCH -- Wednesday, 16 January 2013

[Demeter]

28. Goldman earnings soar on revenue gains, compensation cuts

http://news.yahoo.com/goldman-earnings-soar-revenue-gains-compensation-cuts-125047982--sector.html


Goldman Sachs Group Inc said its fourth-quarter earnings nearly tripled, driven by big gains in stock and bond values, increased revenue from dealmaking and lower compensation expenses. Goldman, the fifth-largest U.S. bank by assets, reported earnings of $2.8 billion, or $5.60 per share, up from $978 million, or $1.84 per share, in the same period a year ago. Analysts mostly had been forecasting much lower figures. Following its early morning report on Wednesday, Goldman shares were up 1.8 percent at $138 in premarket trading.

A significant part of Goldman's earnings boom came from improvements in market values in the stock and bond markets, as well as increased activity. The New York-based investment bank said it took in "significantly higher" revenues from credit products and mortgages in its bond-trading business. Its investing and lending division, which mostly earns money from higher values on Goldman's own stock and bond investments, reported nearly $2 billion worth of revenue. But gains were broad, with revenue up across each of Goldman's business lines, from investment banking to investment management. Overall, its revenue rose 53 percent to $9.2 billion from $6 billion in the fourth quarter of 2011.

Goldman's earnings were also helped by a sharp decline in compensation expenses, typically the biggest cost for Wall Street firms. The bank said compensation fell 11 percent in the fourth quarter compared with a year ago. The expense was just 21 percent of net revenue, roughly half of what the firm usually pays out to employees.