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25 February 2024

Goldman Sachs quarterly profit drops 52%


US investment bank Goldman Sachs on Wednesday said fourth-quarter profit dropped 52 per cent amid falling revenue, dragging down full-year 2010 earnings by 38 per cent from a year ago.

Goldman posted fourth-quarter profit of $2.39 billion, a 52 per cent decline from the same period a year earlier.

For all of 2010, the New York-based bank said profits fell 38 per cent from 2009, to $8.35 billion.

Profits were slightly above market expectations. Earnings per common share were $3.79 in the fourth quarter and $13.18 for the year. Analysts had estimated $3.76 and $13.14, respectively.

But revenue results were worse than expected.

Goldman, one of Wall Street's most prestigious banks, said fourth-quarter revenue fell 10 per cent from a year ago, to $8.6 billion, while for the full year revenue was down 13 per cent, at $39.2 billion.

The average estimate was for $9 billion in the October-December period and $39.49 billion in the year.

"Market and economic conditions for much of 2010 were difficult," Lloyd Blankfein, Goldman chairman and chief executive, said in a statement.

"Looking ahead, we are seeing signs of growth and more economic activity and we are well-positioned to help our clients expand their businesses, manage their risks and invest in the future."

Investment banking revenue rose to $1.51 billion in the fourth quarter, up 30 per cent from the third quarter but 10 per cent lower than the 2009 fourth quarter.

The wealthy Wall Street bank, which became synonymous with the 2008 financial crisis and the target of outrage over lavish executive pay, said compensation and benefits expenses fell 5 per cent to $15.38 billion for 2010.

Goldman said compensation was reduced to fund a $320 million charitable contribution in 2010 to the firm's donor-advised fund, Goldman Sachs Gives.

Among the charges reported was $465 million in the second quarter for Britain's bank payroll tax, imposed to restrain discretionary bonuses deemed excessive.

Last week Goldman pledged a new era of transparency and commitment to customers' interests after taking a beating over its role in the US financial crisis.

The bank, blamed for pushing risky mortgage-based securities on clients and later profiting heavily by betting against those products, issued a report Tuesday on its own business standards, saying it would make a re-commitment to the "primacy" of client interests.

Shares in Goldman fell in New York after the disappointing revenue results. Goldman was down 2.72 per cent at $169.93 in early trade.