Another decent quarter, and another record-breaking year over at Goldman Sachs. It's getting kind-of boring now, but it's not all good news.
Goldman's fourth-quarter earnings came in up 2% at $3.15bn, taking 2007's profit up 14% to a record $10.74bn - at a time when many of the firm's rivals will have had their worst year since 2001.
Bloomberg reports that net revenues in trading and principal investments were up 4% in the fourth-quarter to $6.93bn, equities revenues rose 22% to $2.59bn, investment banking revenues surged 47% to $1.97bn and the firm's asset-management and securities services unit posted revenue gains up 29% to $1.84bn in the period. The news agency quotes Octavio Marenzi, CEO of US-based research firm Celent, who said 'Goldman's results stand head-and-shoulders above its competitors, many of whom have struggled with the difficulties in the mortgage market this past year. Goldman took that weakness, and turned it to its own advantage'.
It's not all good news, however. CNBC quotes Lucas van Praag, Goldman's global head of corporate communications, who admitted that 'September was not good, October saw good business transaction, and November was very difficult'. The news site also quotes an unnamed 'senior Goldman executive', who described November as 'pretty horrible', and who confirmed that the last two weeks of the month 'were probably' the worst in the firm's history.
Firm CFO David Viniar also said in a conference call that 'we're cautious about the near-term outlook for our businesses, as we see dislocation in some of the world's capital markets has continued............(but) Goldman Sachs, like the rest of our peers, is expected to produce strong results in good times.....The true test of our franchise is our results throughout the cycle'. Many are now wondering whether the future will be so bright for even Goldman. The Guardian quotes Brad Hintz, a banking analyst over at Sandford Bernstein, who has cautioned that 'even Goldman Sachs can't repeal the laws of gravity'.
Finally, something somewhat ironic. The New York Times points out that one of the few loss-making trades Goldman made this year was in buying its own shares! The firm bought back 41.2 million shares during its last fiscal-year. Based on the average purchase price and the current stock value, it is estimated that the firm made a paper loss of some $350m on the transactions.