GOLDMAN earnings are out, and the company has lost $.84 per share, and it has missed revenue big time.Analysts had expected losses of just $.11/share.
Revenue has fallen well short of expectations.
Lloyd Blankfein says he is “disappointed.” In other words, the pressure is on these 4 traders to boost trading revenue next quarter.
The full announcement is here and highlights are below.
Pretty much all the numbers look pretty bad.
Also it’s pretty rough from a compensation perspective:
The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) was $1.58 billion for the third quarter of 2011, a 59% decline compared with the third quarter of 2010. The ratio of compensation and benefits to net revenues for the first nine months of 2011 was 44.0%. Total staff levels decreased 4% compared with the end of the second quarter of 2011.
This table shows the big declines in trading and banking revenue.
Net revenues in Investment Banking were $781 million, 33% lower than the third quarter of 2010 and 46% lower than the second quarter of 2011. Net revenues in Financial Advisory were $523 million, up slightly from the third quarter of 2010. Net revenues in the firm’s Underwriting business were $258 million, 61% lower than the third quarter of 2010. Net revenues in both equity underwriting and debt underwriting were significantly lower than the third quarter of 2010, reflecting a significant decline in industry-wide activity. The firm’s investment banking transaction backlog increased compared with the end of the second quarter of 2011. (5)
Institutional Client Services
Net revenues in Institutional Client Services were $4.06 billion, 13% lower than the third quarter of 2010 and 16% higher than the second quarter of 2011.
Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.73 billion, 36% lower than the third quarter of 2010. During the quarter, global economic uncertainty intensified, resulting in volatile markets and significantly wider credit spreads. Although these factors contributed to difficult market-making conditions, particularly in credit products, mortgages and currencies, activity levels were generally consistent with the prior quarter. The decline in net revenues compared with the third quarter of 2010 reflected significantly lower results in credit products, mortgages and, to a lesser extent, currencies. Net revenues in commodities and interest rate products were both higher compared with the third quarter of 2010.
Net revenues in Equities were $2.33 billion, 18% higher than the third quarter of 2010. This increase was primarily due to significantly higher commissions and fees, reflecting higher transaction volumes. Securities services net revenues were higher compared with the third quarter of 2010, primarily reflecting the impact of higher average customer balances. In addition, net revenues in equities client execution were slightly higher compared with the third quarter of 2010. During the quarter, Equities operated in an environment characterised by a significant decline in global equity markets and a sharp increase in volatility levels.
Investing & Lending
Investing & Lending recorded negative net revenues of $2.48 billion for the third quarter of 2011. These results reflected a significant decline in global equity markets and unfavorable credit markets. Results for the third quarter of 2011 included a loss of $1.05 billion from the firm’s investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC), net losses of $1.00 billion from other investments in equities, primarily in public equities, as well as net losses of $907 million from debt securities and loans. These net losses were partially offset by net revenues related to the firm’s consolidated entities held for investment purposes.
Net revenues in Investment Management were $1.22 billion, 4% lower than both the third quarter of 2010 and the second quarter of 2011. The decrease in net revenues compared with the third quarter of 2010 was due to lower incentive fees, partially offset by higher management and other fees, primarily reflecting higher average assets under management. During the quarter, assets under management decreased $23 billion to $821 billion, reflecting net margins.
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