Pay vs profit

16 January 2015 By Antony Currie, Richard Beales Follow @AntonyMCurrie

Wall Street talks about compensation as a share of revenue. On this metric, Goldman paid its people the second-least since going public. Look at the profit left for shareholders, though, and despite small steps in the right direction the firm’s owners are still suffering more.

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Goldman Sachs on Jan. 16 reported fourth-quarter net income of $2.17 billion. At $4.38 a share, profit topped analysts’ consensus estimate of $4.32 a share.

Advisory revenue for the quarter was $692 million, an increase of 18 percent from the same period in the previous year. Equity underwriting revenue fell 45 percent to $342 million and debt underwriting declined 21 percent to $406 million.

The top line in fixed income, currency and commodities was $1.2 billion, a 29 percent drop from the final three months of 2013. Equities trading revenue was 8 percent lower at $1.9 billion, investing and lending fell 26 percent to $1.5 billion and investment management was virtually flat at $1.6 billion.

Net income for the year of $8.1 billion was 5 percent higher than in 2013 while annual revenue was up 1 percent at $34.5 billion. The firm set aside $12.7 billion to cover compensation for the year, a 1 percent increase on 2013. The return on common equity for 2014 was 11.2 percent.

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