The Banking and Strategy Initiative

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Bank Results Season: GS falls behind in relevance with $34 Bln and Profits of $ 8 Bln in 2013

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Earnings have actually improved to $15.46 for the year but that means the quarterly average EPS is still under $ 4. The firm however took a 31% share of its $6 Bln Investment Bank earnings (Deal advisory ) from M&A. Apparently the bank also ranked at the to of a bull year in Equities and IPOs. The year saw the firm closing out its prop trading activities in line with the finally rolled Volcker rule

In 2010, we began closing down our proprietary trading operations, specifically Goldman Sachs’ Principal Strategies and our Global Macro Proprietary trading desk. In addition, we announced in 2012, our intention to redeem some hedge fund investments. Since 2012, we have redeemed approximately $2.2 billion of hedge fund investments and we will continue to redeem our interest.

Deals counted in the brilliant year for Investment Banking advisory include g Vivendi’s $8.2 billion sale of its controlling stake in Activision. Ingersoll Rand’s $5.3 billion of Allegion and the $2.9 billion sale of Saks to Hudson’s Bay.

 During the fourth quarter we actively supported our client’s financing needs participating in Darling International’s $2.7 billion debt and equity offering. Twitter’s $2.1 billion IPO and Moncler’s $1.1 billion IPO.

Equity underwriting also jumed 52% seuentially to $1.1 Bln. We had skipped the Bank’s $3.70 results in the June quarter and the firms scores of advisory business were an abysmal $90m and $125 mln in equities and fixed income in Q3 2011 GS is trading down despite the exemplary results as Trading  performance expectations were raised on a penny BAC making a 15% comeback in its deleted FICC and Equity trading incomes which the bank reports on a combined basis for obvious reasons of disinterest in the business.

Credit was up on stronger client activity that was supported by tighter credit spreads and solid issuance trends but Commodities were flat even in the sequential 46% jump Rates and mortgages declined in the quarter and the slump may carry on to 2014 Q1.

Book Value at Goldman is up to $152 and with Deal income taking lead, it is sooner or later put premium on its calls and stock scores till the end of 2014 , where BAC may also get a fillip on its higher Non interest income yield additions in the Cards& Auto  and  Mortgages( which have a very low point to come back from in 2014 Q1). The bank’s buybacks were a great $6 billion The investment banking FI and equity income was a tad ahead of market, more in equities than Fixed Income.  As we had been also requesting in these writings earlier in 2009 and 2010, the Bank has turned down its averaged 42% Compensation ratio further south to close at 36.9% in 2013.  As FX and swaps sent south in the $1.7 Bln quarter overall compensation expense jumped sequentially by $3 Bln on quarter but was down 3% on year Buybacks were $6 Bln worth

The Wall Street survivor also leads in pipeline terms carrying over a lot of accruing deal business Tighter spreads in Q4 did not result in better business Volumes in FICC trading but things might change towards the end of Q1 I guess I missed this year’s final earnings call , so just transcripts later The bank exited its Hedge Fund administration business in Q4 with a hefty gain of $494 mln but that was also responsible for equities annual business downtick of 14% to $7 Bln in 2013. FICC annual revenues were $8.7 Bln

I’d think in first estimates the revenue loss from that has not been covered by this sale of business and the FICC loss in revenue is just $250 mln as 2013 was already bottom of the pile. Volcker’s impact on its Investing & Lending business will remain key to watch out for in 2014. Investment Management came back a smart 31% on the sequential quarter The recently pumped up Morgan Stanley investment Bank with a smart Q2 and Q3 2013 receded into the dumps again with a 2/3rds decline in Investment Banking and Wealth management (Broking) profit   Bank Earnings , Bank Earnings 2014

Lehman Brothers Rockefeller centre

Lehman Brothers Rockefeller centre (Photo credit: Wikipedia)

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