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January 19, 2011 at 09:46 AM
Goldman Sachs (GS) on Wednesday in its fourth-quarter earnings report met analysts’ expectations but disappointed them just the same because the Wall Street giant’s earnings dropped a whopping 53% from their record high in 2009.
Analysts’ consensus was for earnings per share of $3.80, while the company reported EPS at $3.79 compared with $8.20 for the Q4 2009 and $2.89 for Q3 2010.
The lower profits were largely due to a drop in trading and investment banking revenues. Fixed-income, currencies and commodities revenue fell 37% from a year ago, while equities trading was down 5% and investment banking was down 10%, according to Goldman’s news release.
However, within the Investment Banking unit, revenues in Financial Advisory were 9% higher than in 2009, rising to $2.06 billion for the full year of 2010, primarily reflecting an increase in client activity. For the quarter, revenues in Financial Advisory were $628 million, 7% lower than the fourth quarter of 2009.
In the Investment Management unit, revenues also were 9% higher than in 2009, at $5.01 billion for 2010, “primarily reflecting higher incentive fees across the firm’s alternative investment products,” the Goldman release reported. “Management and other fees also increased, reflecting favorable changes in the mix of assets under management, as well as the impact of appreciation in the value of client assets.”
During the year, assets under management (AUM) decreased 4% to $840 billion, primarily reflecting industry-wide outflows in money market assets. For the quarter, Investment Management revenue was 14% higher than a year ago at $1.51 billion, reflecting “significantly” higher incentive fees. Quarterly AUM rose 2% to $840 billion due to appreciation in client asset values and money market inflows.
