Goldman Sachs Reduces Rewards, Sees Improving Economy

Fourth quarter net income at Goldman Sachs (NYSE:GS) dropped 58 percent, but still beat analysts’ estimates. Net income was $1.01 billion ($1.01 per share) compared to $2.39 billion ($3.79 a share) a year ago. Analysts surveyed by Bloomberg had estimated earnings at $1.23 a share. Fourth quarter revenue declined 30 percent to $6.05 billion.

Full year net income was $4.44 billion, down 44%. Return on equity fell significantly to 3.7 percent from 11.5 percent in 2010. Full year revenue was off 26 percent to $28.8 billion. Full year revenue and net income were both the lowest since 2008.

In the key business area of fixed income, currency and commodities trading, revenues were down from $13.7 billion to $9.02 billion for the full year. In Investing & Lending, revenue declined 72 percent to $2.14 billion for the year. The investment banking division’s revenue declined 9 percent to $4.36 billion, and likewise revenue from financial advisory services was off 4 percent to $1.99 billion, both for the full year. Revenues from underwriting equity and debt also declined substantially.

The results benefited from a focus on reducing compensation costs, which were down 21 percent, in the wake of a slowdown in trading — the main contributor of the firm’s revenue. Chief Executive Officer Lloyd C. Blankfein, 57, said in a statement, “As economies and markets improve — and we see encouraging signs of this — Goldman Sachs is very well positioned to perform for our clients and our shareholders.”