Political India: Engaging America

Even as world markets continued to see increased volatility amidst growing uncertainty investment banking major Goldman Sachs has declared a third quarter loss of $393 million, only its second quarterly loss since it went public in 1999.

Notwithstanding a 59 per cent decline in compensation levels that followed in the wake of this loss the firm still managed to set aside a whopping $1.58 billion, or $292,836 per employee, to pay out as “salaries, estimated year-end discretionary compensation, amortisation of equity awards and other items such as benefits.”

The firm said that net revenues in investment banking, investment management and institutional client services were respectively lower than the Q3 2010 figures by 33 per cent, 4 per cent and 13 per cent.

However the most significant loss appeared to be in investing and lending, where Goldman recorded negative net revenues of $2.48 billion for the third quarter of 2011. The firm admitted that this loss was to an extent due to the weakness in its private equity portfolio with the Industrial and Commercial Bank of China Limited (ICBC). This section of its investments suffered a loss of $1.05 billion, the company said.

The overall diluted loss per common share was $0.84 compared with diluted earnings per common share of $2.98 for the third quarter of 2010 and $1.85 for the second quarter of 2011.

“These results reflected a significant decline in global equity markets and unfavourable credit markets,” the firm said in a statement.

Goldman’s results however follow close on the heels of other banking majors in the U.S. declaring stronger earnings statements. Specifically Bank of America posted a pre-tax profit of $6.2 billion, up from a loss of $7.3 billion a year ago.

Similarly Citigroup, which had accepted a total of $45 billion from the Treasury to shore up its debilitated balance sheet during the worst of the financial crisis in 2008, proved it had bounced back strongly after it announced that its third-quarter net income had touched $3.8bn, 74 per cent higher than the same period a year ago.

Labels: Goldman Sachs, third quarter loss