The Banking and Strategy Initiative

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Bank Earnings Season: Goldman Sachs thumps in the majority opinion (Q4 and Full Year 2012)

English: Wall Street sign on Wall Street

English: Wall Street sign on Wall Street (Photo credit: Wikipedia)

Greg Smith’s ex employer offices in London got off to a wrong start trying to finagle tax-free bonuses and have since abandoned the plan leaving the HR team to explain the relative standing of both stances ( to delay the bonus and to instead get delivered at the pre-ordained times) in BCS terms. The Wall Street institution however kept its promises on performance with a $14 Earnings per share beating the more sunny Q4 estimates from other bank analysts including Meredith Whitney.

As we said an hour ago the bank could easily cross $5 in Q4 and it did at $5.60 beat the comfortable $3.66 number by a couple of long yards. Lloyd Blankfein in the meantime has added only 65,000 common stock units and another 26,000 in restricted stock units on December 31, his last payday for 2012 while he awaits another fat calculation that might well be his going away present after the board meets in early 2013. He has of course promptly sold half of those holdings in the hour of vesting in the same report so yes compensation has been brought to heel and it will remain the main topic for the bank as it starts to rehire for Wall Street in 2013 and compensation structures seem to be more experimental in search of the right talent than locking into long-term compensation at European banks flailing for capital. Stock based compensation locked for three years has become a norm at European competitors

FICC revenues for the year as a whole were muted but reached $10 bln at the $9,91 bln mark and tangible book value increased by only single digit gains of 12% at $144 in a very ordinary year for the behemoth whose last quarter could probably still not undo what was set in motion after the browbeating in 2009

Tier I Common Capital continues to be comfortable and the press release continues to stick with Basel I terms with core liquidity coming back from $135 bln levels at the end of Viniar ‘s tenure to $175 bln well over its 2011 $160 bln mark

The bank managed another $2 B n Financial Advisory revenues out of $4.93 bln for the year in Investment Banking a sequential increase of 21% in Q4 taking it to $1.41 bln for Q4 alone Underwriting Income makes a big comeback with $893 mln in Q4 doubling its depleted take in Q4 2011

Full year Client revenues ( Client Trading incl FICC) were $18.12 bln and the bank claims significant additions in mortgage revenues (Secondary yet) apart from its $10 bln for the year in FICC ( Fixed Income, Currency and Commodities ) and equities bringing in a health y $8.21 bln the negative DVA adjustment of $700 mln shows the banks debt traded up in the Q4 comeback

Q4 equities scored a great $2.3 bln a far cry from the days of 2010 and 2011 when the division and likes of Greg Smith were totally decimated at the bank’s trading floors having tripled annual profit and EPS to $7.5 bln and $14.4 this year

Other divisions contributed the usual drop in ICBC stake this time under $500 mln,  Net Interest Income creeping to $1.85 bln and asset management revenues for the quarter growing to $1.5 bln Inflows increasing a good 8%

As of now the bank is still missing a footprint in Global Trade/Transaction Banking and its new businesses in Wealth , insurance broking and other not yet off the ground while it has sold a few of its alternative assets portfolios including the painful ones in developing markets and the Cogentrix power trading assets also international divestments.

The RWA Balance sheet is still just under a $1 Tln at $939 bln. Deals this year included Disney and Kraft take out  among others in the first half itself.  Compensation share this year is up 6% (updated at



The Bank Results Season series from 2008 is just getting a new fresh name as the new edition of Banking begins in earnest after the roller coaster ride of fiscal management and undocumented unverified mortgages for the internet generation now to be disowned in the social world 3.0 😀

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