The Banking and Strategy Initiative

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Bank results season: An adieu to the old gold (Goldman Sachs, December 2010)

Lloyd Blankfein, CEO Goldman Sachs
Image by DonkeyHotey via Flickr

Even after the Business Standards committee from inside the bank split trading for clients and self into segments and Lloyd Blankfein said no more prop trading, no one expected GS to go so deep into its own territory in the final quarter. The firm ended the year with $8.64 bln in revenues in Q4 and just $40 billion for the year with return on equity margins an abysmal 11% after paying off the $550 million settlement with the SEC, the $450 million super tax in UK and the $305 mln to NYSE for its Designated Market Maker Licence disrepair!! The Earnings for the quarter were less than the half we reported correspondingly from 2009 December while it was a 27% improvement from September 2010 to come to $3.79  in unduly exceptional circumstances.

Investment banking is unlikely to let the firm’s clientele/investors into any rosy future limited to $4.81 billion in the whole year while trading for clients were 37% lower at $13.7 billion after a tremendous 2009. The complete Institutional Client Services tab of sales also stopped short at $21.80 billion in a subdued 2010 after a shakedown completed much earlier in 2009, leaving me a little fogged as to why I should consider any of the paper reporting any good after all the standards and moral high grounds we employ to get to the results. The final verdict, the king is out of his skin and needs a makeover!

The Facebook investment is also going to bite the Wealth clients this year in the $50 billion valuation being at the high end and a perfect exit for early investors on the Facebook roster than those of the $1.5 billion. But then it may be too soon to write these kings off, as they are good at makeovers. And they haven’t borrowed an extra penny or borrowed Diamond’s and Deutsche’s banking inter market notes..

Image representing Goldman Sachs as depicted i...
Image via CrunchBase


This entry was posted on January 19, 2011 by in Amitonomics, Banking, US.


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