Goldman Sachs’ stellar third quarter will lead to record bonuses, according to the Wall Street Journal:
The nimble investment banking giant parlayed increased risk taking to cash in on trading and investments with its own money. Results, while not record-setting, demonstrate how the firm continues to distance itself from still-weakened competitors.
Profit ballooned to $3.19 billion, or $5.25 a share – more than triple what Goldman earned during the year-ago period when banks were pummeled by the credit tumult. Goldman also plans to reward its employees well: It set aside $5.35 billion for benefits and compensation during the period.
Goldman’s business from fixed income, currency and commodities trading again bolstered its bottom line, with revenue more than tripling. Revenue from its principal investments soared 55% from second quarter after losing money a year earlier. Investment-banking revenue fell 31% and financial advisory revenue dropped 47%. The bank also posted a revenue gain of $1.26 billion in revenue from principal investments, which includes a gain of $344 million related to its stake in the Industrial & Commercial Bank of China Ltd.
That effort comes as the New York-based company set aside $16.71 billion for compensation and benefits during the first nine months of 2009, which is enough to pay $568,367 to each of its employees. The performance during the third quarter puts compensation on track to beat the record $20.2 billion paid out during the market’s peak two years ago. Levels are already outpacing the $10.9 billion doled out in 2008 at the height of the financial crisis.
Barry Ritholz has an apt reaction to this latest piece of Goldman Sachs news.