Goldman Sachs Group Inc. announced a strong performance in equity underwriting, but it also faced its worst year when it comes to fixed income trading since 2005. Its overall profits fell 10% to 2.3 billion dollars.
Goldman Sachs Group Inc.s fourth-quarter revenues for equity underwriting were benefited by initial public offerings, which helped the company to more than double its last years revenue to 622 million dollars.
The company said its investment banking backlog of potential deals had “increased significantly” in comparison to the one in the end of 2012. Goldman Sachs did that as a sign that it trusts in the persistence of the inceptive mini-boom in mergers and acquisitions and equity offerings. However, over the quarter, its more important source of revenue – fixed income trading – fell by 15%.
This is one of the reasons why Goldman posted its worst annual revenue in eight years – 8.6 billion dollars, highlighting in particular, “significantly lower revenues in mortgages”. The overall revenue of Goldman in the fourth quarter was 8.8 billion dollars, which is 5% lower than the revenue of the bank from the fourth quarter of 2012.
All this forced Goldman Sachs to take tough measures. The bankers bonuses were cut by the bank, with the payroll falling 3% to 12.6 billion dollars in order to make a ratio of pay to revenues of 36.9%, which is a percentage point lower than the one from the end of 2012. The Chief Executive Officer of Goldman – Lloyd Blankfein, said: Our work in advancing our client franchise and in ensuring continues cost discipline has allowed us to provide solid returns even in a somewhat challenging environment. We believe that we are well positioned to generate solid returns as the economy continues to heal and provide considerable upside for our shareholders as conditions materially improve.”
The banks return on equity was 12.7%. It beat the one of JPMorgan Chase & Co. and turned out to be more than twice as much as the one of the Bank of America.
According to CNN Money, the current share price of Goldman Sachs Group Inc. is 2.00% down, and its one-year return rate is 1.18% down. The 26 analysts offering 12-month price forecasts for Goldman Sachs Group Inc. have a median target of 178.50, with a high estimate of 206.00 and a low estimate of 134.00. The median estimate represents a +1.90% increase from the last price of 175.17.
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