Friday, January 21, 2011

Goldman Sachs Reports Mixed Q4 Earnings (Financial Charts, Review) *Revenues down, Earnings up* GS

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Goldman Sachs reported Q4 2010 financial results on Wednesday, January 19, 2011

Goldman Sachs Reports Mixed Earnings for Fourth Quarter 2010

Goldman Sachs reported quarterly financial results on Wednesday, January 19 before the market opened. Goldman Sachs financial performance charts for Q4 2010 and prior quarters have been posted, along with commentary, on the Goldman Sachs Financial Performance page. The charts are:

Goldman Sachs Performance by the Quarters
Earnings per Share (Diluted)
Net Revenues, Operating Income, Net Income
Operating Margin, Net Margin
Return on Assets
Income Statement Components
Net Revenues, Earnings per Share Growth Rates

In addition, a Bonus Chart has been included below in this post, Goldman Sachs' Operating Expense Ratio. More charts have been posted on the Goldman Sachs Financial Performance page.

Summary Q4 2010 Goldman Sachs' Q4 2010 financial results were mixed, even disappointing: net revenues were down but net income and earnings per share were up from the prior Q3 2010 (QoQ). More to the downside, Q4 2010 financial performance did not meet prior year Q4 2009: net revenues, net income and earnings per share were all down (YoY). Goldman Sachs financial performance was better in 2009 than 2010 and Q4 2009 was the best quarter since the Recession. Q1 2010 has been the second best quarter.

Income Statement Q4 2010 Goldman Sachs reported total revenues of $8.6B, net income of $2.4B, and earnings per share of $3.79. From the prior quarter Q3 2010, net revenues were down -2.93%, net income up +25.76%, and earnings per share up +27.18%. From the prior year Q4 2009, these were down -10.12%, -51.76%, and -53.78%, respectively. The operating and net margins have rebounded with the improved QoQ results. Most of the increase in net income was due to a decrease in noninterest expense, operating expenses. Therefore, net income and earnings per share continue to improve the latest 2 quarters due to decreased expenses, not from top line growth.

Balance Sheet Q4 2010 Total assets slightly increased QoQ +0.26% to $911B. The capital to assets ratio (total stockholders' equity divided by total assets) is an adequate 8.49%, which about the average for the most recent 5 quarters. Tier 1 capital dropped to 13.3% form 15.7% in Q3 2010, but continues adequate.

Goldman Sachs Bonus Chart!
Goldman Sachs Performance by the Quarters (Operating Expense Ratio)

Goldman Sachs Operating Expense Ratio (Chart) Below is a chart of the operating expense ratio for Goldman Sachs. The operating expense ratio is NonInterest Expense divided by Total Revenues which are NonInterest Income and Interest Income. There have been 2 consecutive quarterly decreases which is a positive trend. An decreasing share of each dollar of revenues is being spent on operating expenses. Ultimately a continuation of this trend will positively affect profitability and already has. The chart covers the past 15 quarters, from May 2007 through the latest quarter reported, December 2010. More charts have been posted on the Goldman Sachs Financial Performance page. Recent chart data is:
Quarter, Operating Expense Ratio
Dec09: 20.49%
Mar10: 53.04%
Jun10: 70.25%
Sep10: 56.87%
Dec10: 49.82%

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