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Last Update: 16-Oct-12 09:08 ET
Goldman Sachs shares little changed following beat on earnings & dividend increase
Goldman Sachs (GS $124.55 +0.05) reported third quarter earnings of $2.85 per share, $0.58 better than the Capital IQ consensus of $2.27, while revenues rose 132.8% year/year to $8.35 billion versus the $7.24 billion consensus.Book value per common share and tangible book value per common share both increased approximately 3% during the quarter to $140.58 and $129.69, respectively. The firm's global core excess liquidity was $170 billion as of September 30, 2012. In addition, the firm's Tier 1 capital ratio under Basel 1 was 15.0% and the firm's Tier 1 common ratio under Basel 1 was 13.1% as of September 30, 2012. Net revenues in Investment Banking were $1.16 billion, 49% higher than the third quarter of 2011 and 3% lower than the second quarter of 2012. Net revenues in Financial Advisory were $509 million, slightly lower compared with the third quarter of 2011. Net revenues in the firm's Underwriting business were $655 million, more than double the amount in the third quarter of 2011. This increase primarily reflected significantly higher net revenues in debt underwriting, principally due to higher net revenues from leveraged finance activity. Net revenues in equity underwriting were higher compared with the third quarter of 2011, primarily reflecting an increase in client activity. The firm's investment banking transaction backlog declined slightly compared with the end of the second quarter of 2012.
Net revenues in Institutional Client Services were $4.18 billion, 3% higher than the third quarter of 2011 and 8% higher than the second quarter of 2012. Net revenues in Fixed Income, Currency and Commodities Client Execution were $2.22 billion, 28% higher than the third quarter of 2011. This increase reflected significantly higher net revenues in mortgages and higher net revenues in credit products, currencies and interest rate products, partially offset by significantly lower net revenues in commodities. FICC Client Execution operated in an environment generally characterized by tighter credit spreads, as certain central banks took steps to ease monetary policy; however, broad market concerns persisted and levels of activity generally remained low. Net revenues in Equities were $1.96 billion, 16% lower than the third quarter of 2011. The net loss attributable to the impact of changes in the firm's own credit spreads on borrowings was $370 million. Net revenues in Investing & Lending were $1.80 billion for the third quarter of 2012. Investing & Lending net revenues were positively impacted by tighter credit spreads and an increase in global equity prices. The accrual for compensation and benefits expenses for the third quarter of 2012 was $3.68 billion, which was higher than the third quarter of 2011, due to higher net revenues. The ratio of compensation and benefits to net revenues for the first nine months of 2012 was 44.0%, consistent with the first nine months of 2011. Non-compensation expenses were $2.38 billion, 13% lower than the third quarter of 2011 and 4% higher than the second quarter of 2012. The third quarter of 2012 included net provisions for litigation and regulatory proceedings of $62 million. The company also increased its dividend to $0.50/share from $0.46/share.
Net revenues in Institutional Client Services were $4.18 billion, 3% higher than the third quarter of 2011 and 8% higher than the second quarter of 2012. Net revenues in Fixed Income, Currency and Commodities Client Execution were $2.22 billion, 28% higher than the third quarter of 2011. This increase reflected significantly higher net revenues in mortgages and higher net revenues in credit products, currencies and interest rate products, partially offset by significantly lower net revenues in commodities. FICC Client Execution operated in an environment generally characterized by tighter credit spreads, as certain central banks took steps to ease monetary policy; however, broad market concerns persisted and levels of activity generally remained low. Net revenues in Equities were $1.96 billion, 16% lower than the third quarter of 2011. The net loss attributable to the impact of changes in the firm's own credit spreads on borrowings was $370 million. Net revenues in Investing & Lending were $1.80 billion for the third quarter of 2012. Investing & Lending net revenues were positively impacted by tighter credit spreads and an increase in global equity prices. The accrual for compensation and benefits expenses for the third quarter of 2012 was $3.68 billion, which was higher than the third quarter of 2011, due to higher net revenues. The ratio of compensation and benefits to net revenues for the first nine months of 2012 was 44.0%, consistent with the first nine months of 2011. Non-compensation expenses were $2.38 billion, 13% lower than the third quarter of 2011 and 4% higher than the second quarter of 2012. The third quarter of 2012 included net provisions for litigation and regulatory proceedings of $62 million. The company also increased its dividend to $0.50/share from $0.46/share.
