Chillin' out till it needs to be funded
Goldman Sachs has done it again. Like its counterparts in Boxing from Muhammed Ali to Mike Tyson, it has outperformed everything and every competitor from banking to asset management on the street and fought governments in doing “God’s work”
Even in this election year both Obama and Gordon Brown spend some time each day trying to figure out why Goldman Sachs has the banking market in a spell. Despite 2009 assets of $860 bn that are more or less the retail deposits at competitor Citi, it’s involvement in a SEC suit has already brought down markets in Shanghai and Hongkong by more than 10%.
Today its results will build on its own annual performance of $22.13 Earnings per share in the middle of the crisis including $8 in the quarter to outperform this March 2010. We will post updated results here for the behemoth that has $45B in annual revenues for 2009, only people assets and costs, now holds full fledged Banking licences in Developed and Growth markets and has increase its book assets at a CAGR of 20% every year since the last 10 years, doubled its asset management assets to a $1T in 5 years and outperformed peers by 30-50% on Returns in the last three years.
However , with GS we would have covered result announcements of the four JPM, C, BAC and GS and would not feature others except Wells Fargo, Lehman and Bear having fallen off the radar and Nomura not very interesting to us.
Goldman Sachs has increased its CP and money markets exposure by nearly 60% in 2009 while also growing Equities and convertibles also by 30%. It has grown its footprint in the LatAm region in 2009, handling the Bovespa IPO worth $3.5 billion as also its $18B merger with BM&F Brazil. Its own internal strategy documents find it to be weak / unexposed in Credit, Commodities and Mortgages in the Growth Markets that include its own coined BRIC economies.
2010 Results: Q1 turned evenly for Goldman Sachs with $7.34 Billion in Fixed Income and Trading revenue par for the course from 2009 but a tad lower and FICC markets to be dull in 2010. GS has always been a leader in Capital with a Tier I common ration of 12% and leverage down to 12 times. Though leading in Industry wide completed M&A and IPO in Q1, revenues plummeted 28% Q-o-Q to $1.18 billion and Financial Advisory revenues were limited to $464 million.
Out of the Total revenue of an amazing $12.75 billion, Trading and Principal Investments came in 60% higher sequentially to $10.25 billion. Goldman Sachs has easily borne a $222 million loss in ICBC and $34 million in real estate. The IB segment included deals for Warren Buffet’s Berkshire Hathaway with North Santa Fe and Schlumberger for $2.2 B. Asset Management and Securities Services revenues are down by a 6th sequentially with $30 billion in outflows
Compensation ratio is down to 43% in Q1 2010 from 50% in Q4 and nets to $5.49 billion including payroll taxes. Effective tax rate is higher at 33%
The $2.3 billion in Equities income includes $881 million in commissions and $1.45 billion in trading a very healthy ratio.
Net Interest Income is a $1.4 billion and Total Profit a new Industry standard of $3.3 billion, bringing earnings down 33% to$6 per share GS is the only one of top 4 attendant in most equity transactions in the period, with underwriting income an awesome $720 million to speak for it.
As I switch off, the team is rediscovering the process of selecting the reference portfolio in Abacus ACA explaining it again to the Press Corps. Total assets of $880 billion are supported by $65billion in Common Equity. For the appropriate RWA the Basel-I TCE is 13.2%. This includes $2.2 billion in share repurchases by the company in the quarter.