Goldman Sachs (NYSE: GS) disclosed their fourth quarter earnings results earlier today, and the results are cause for concern at the behemoth investment bank.
Goldman’s earnings fell 53% in the fourth quarter due to sharp declines in its investment banking businesses. The firm earned $2.23 billion after paying preferred dividends in the last quarter of the year, down from $4.79 billion in the same period year earlier. On a per-share basis, the earnings came out to $3.79 per share versus $8.20 per share.
With significant attention being paid to compensation figures, the firm does show a bright spot investors may appreciate. In it’s disclosures, the company noted that it rewarded its employees with $15.38 billion in salaries and bonuses, or 39.3 percent of its annual revenue, for 2010. The amount was 5 percent lower than 2009, but compared to Revenue falling 10 percent to $8.64 billion it still seems out of correlation.
Underwriting fell 12 percent, while financial advisory services fell 7 percent on lower mergers and acquisitions. Though the firm has rebounded strongly from the 2008 financial crisis, dealing with the new Dodd Frank financial regulatory reform legislation will provide further challenges in the coming years. Today’s results are disappointing when considering the major commercial banks like JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) have been showing a strong fourth quarter, but the firm will likely do what it has always done, reinvent itself and find a new way to grow earnings.
