Goldman earnings almost double to $3.3 billion
Tuesday, April 20, 2010; 9:21 PM
NEW YORK -- Goldman Sachs said its first-quarter earnings nearly doubled to $3.3 billion, but the blockbuster results failed to quell the controversy over government allegations that the Wall Street giant had defrauded investors.
The better-than-expected results were boosted by its trading revenue, particularly in bonds, commodities and currency. For the first three months of 2010, Goldman said it earned $5.59 a share compared with $3.39 a share, or $1.7 billion a year earlier. In the fourth quarter of 2009, Goldman also reported strong earnings, of $8.20 per share.
Revenue rose 33 percent, to $12.8 billion. Analysts surveyed by Thomson Reuters had estimated earnings of $4.01 per share on revenue of $1.2 billion.
Goldman, criticized for its role in the financial crisis and for paying billions of dollars in bonuses after receiving taxpayer funds, said it set aside 43 percent of revenue for compensation expenses, the lowest-ever ratio for the firm. Although the much-scrutinized compensation ratio was down from 50 percent a year ago, the amount set aside for salaries and bonuses was $5.5 billion, up from $4.7 billion in the first quarter of 2009.
"Our performance reflects more signs of growth across the economy," chief executive Lloyd Blankfein said in a statement. "In light of recent events involving the firm, we appreciate the support of our clients and shareholders."
Goldman is facing a maelstrom of negative publicity over a lawsuit filed Friday by the Securities and Exchange Commission accusing the firm of selling a mortgage-related investment in 2007 that was secretly designed to lose value.
In its first live response to the fraud allegations, Goldman took the unusual step of inviting the public to listen to its conference call Tuesday hosted by the firm's co-general counsel, Gregory Palm, and chief financial officer, David Vinar, who expanded on many of the rebuttals Goldman has made in written statements since Friday.
Palm said the bank plans to fight the allegations at trial, though he added that there was always an option to settle if there is an "agreeable" offer.
Goldman shares fell $3.34, or 2.1 percent on Tuesday, to close at $159.98. On Friday, Goldman stock had plunged nearly 13 percent. Asked during the conference call whether Goldman should have disclosed the SEC investigation to shareholders after the firm received a letter from the agency describing potential charges, Palm, said it did not make sense to tell investors every time it received a letter.
"We just disclose it if we consider it to be material," Palmer said.