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Goldman says profits up sharply | Goldman says profits up sharply |
(9 minutes later) | |
US bank Goldman Sachs has said its net profits rose sharply in the fourth quarter, beating expectations. | US bank Goldman Sachs has said its net profits rose sharply in the fourth quarter, beating expectations. |
The company made $4.95bn (£3.06bn) between September and December, compared with a loss of $2.12bn in the same period in 2008. | The company made $4.95bn (£3.06bn) between September and December, compared with a loss of $2.12bn in the same period in 2008. |
Goldman said it will pay $16.19bn in compensation and benefits for the whole year, up 48% from 2008. | Goldman said it will pay $16.19bn in compensation and benefits for the whole year, up 48% from 2008. |
But its compensation as a percentage of net revenues was 35.8%, the lowest since it went public in 1999. | But its compensation as a percentage of net revenues was 35.8%, the lowest since it went public in 1999. |
For the whole of 2009, the bank had net profits of $13.39bn, up from $2.32bn in the previous year. | For the whole of 2009, the bank had net profits of $13.39bn, up from $2.32bn in the previous year. |
Shares in Goldman initially rose when trading began in New York but then fell back, and were down 0.4% to $167.10. | Shares in Goldman initially rose when trading began in New York but then fell back, and were down 0.4% to $167.10. |
US President Barack Obama is due to outline new measures to clamp down on financial risk in a speech later on Thursday. | US President Barack Obama is due to outline new measures to clamp down on financial risk in a speech later on Thursday. |
Compensation increases | Compensation increases |
"Despite significant economic headwinds, we are seeing signs of growth and remain focused on supporting that growth," said Goldman chief executive Lloyd Blankfein said. | "Despite significant economic headwinds, we are seeing signs of growth and remain focused on supporting that growth," said Goldman chief executive Lloyd Blankfein said. |
The BBC's business editor Robert Peston said that the compensation came to about $500,000 per head at the bank. | The BBC's business editor Robert Peston said that the compensation came to about $500,000 per head at the bank. |
The bank said its annual net revenues - $45.17bn, up from $22.2bn in 2008 - was down 2% from its record year in 2007 but it said its total compensation had fallen at a much faster rate. | The bank said its annual net revenues - $45.17bn, up from $22.2bn in 2008 - was down 2% from its record year in 2007 but it said its total compensation had fallen at a much faster rate. |
It is paying staff 20%, or $4bn, less than it paid that year. | It is paying staff 20%, or $4bn, less than it paid that year. |
The issue of banker compensation has become a source of public anger on both sides of the Atlantic, with bankers awarding themselves large pay-outs after accepting large government bail-outs. | The issue of banker compensation has become a source of public anger on both sides of the Atlantic, with bankers awarding themselves large pay-outs after accepting large government bail-outs. |
Most US banks have paid back their government loans now, and have raised their compensation levels. | Most US banks have paid back their government loans now, and have raised their compensation levels. |
Goldman's bonus is in line with large pay packets awarded to bankers at its US rivals. | Goldman's bonus is in line with large pay packets awarded to bankers at its US rivals. |
Rival banks | Rival banks |
In the past week, JPMorgan Chase said it would award $27bn in compensation for the last year, up 18% from 2008. | In the past week, JPMorgan Chase said it would award $27bn in compensation for the last year, up 18% from 2008. |
In the autumn of 2008, all big banks were just hours from meltdown; and here is Goldman, a year later, generating a fraction less than its all-time record 2007 revenues. It's a funny old world Robert Peston, BBC business editor Read Robert's blog | |
Morgan Stanley's compensation will rise 31% to $14.4bn. | Morgan Stanley's compensation will rise 31% to $14.4bn. |
Citigroup - which reported a loss in 2009 and a significant minority of its shares held by the US taxpayer - plans to pay its bankers $25bn, down 20% from the previous year. | Citigroup - which reported a loss in 2009 and a significant minority of its shares held by the US taxpayer - plans to pay its bankers $25bn, down 20% from the previous year. |
Bank of America - which also made a 2009 loss - did not give a compensation figure, but it is included in its non-interest expenses. | Bank of America - which also made a 2009 loss - did not give a compensation figure, but it is included in its non-interest expenses. |
That figure almost doubled to $11.7bn in the past year. | That figure almost doubled to $11.7bn in the past year. |
Goldman said in December that its 30 top executives would not receive any cash bonuses in 2009. | Goldman said in December that its 30 top executives would not receive any cash bonuses in 2009. |
Their bonuses will be in the form of restricted shares, which cannot be sold for five years. This is aimed at discouraging excessive risk-taking in the wake of the global financial crisis. | Their bonuses will be in the form of restricted shares, which cannot be sold for five years. This is aimed at discouraging excessive risk-taking in the wake of the global financial crisis. |
Goldman has borne the brunt of criticism over banker pay, raising its bonus pool while accepting a $10bn US government bail-out. | Goldman has borne the brunt of criticism over banker pay, raising its bonus pool while accepting a $10bn US government bail-out. |
It has since repaid the government loan. | It has since repaid the government loan. |
Mr Obama has vowed to "recover every single dime" from banks. | Mr Obama has vowed to "recover every single dime" from banks. |
He has outlined a new levy aiming to recover $117bn from financial institutions, and criticised banks for "massive profits and obscene bonuses". | He has outlined a new levy aiming to recover $117bn from financial institutions, and criticised banks for "massive profits and obscene bonuses". |