Posted January 17, 2013 by Jake Emen in World

Goldman Sachs Group, Inc.(NYSE:GS) Layoffs Boost Investor’s Returns - MS

Northern, WI 1/17/2013 (avauncer) - Goldman Sachs Group, Inc.(NYSE:GS) fourth-quarter revenues tripled  after it paid a three year record low salaries. As a %age of revenue the salaries were only 37.9% of the fourth quarter earnings. This is the second lowest salary paid by the bank after it went public in 2009.

Harvey Schwartz who is due to take charge as CFO of the bank signaled that overpaying someone wasn’t a viable option.

After the release of Goldman Sachs Group, Inc.(NYSE:GS) results other banks will be pushed to follow suit but banks like Morgan Stanely (NYSE:MS) will have a hard time cutting costs so aggressively amid falling revenue.

Past financial crises, Goldman Sachs Group, Inc.(NYSE:GS) was in the negative limelight as botched trades during the financial crisis attracted analysts’ critique and customer trade volumes winkled and profits shrunk.

During 2012 Goldman Sachs Group, Inc.(NYSE:GS) slashed 3% of the workforce; Morgan Stanley (NYSE:MS) could cut 1,600 jobs in 2013 and the trend will ripple across the Wall Street since most banks have the same problems.

Goldman Sachs Group, Inc.(NYSE:GS) reported fourth quarter earnings earnings were $978 million. This means the YOY per share earning eclipsed analysts forecast of $3.78; rising from$3.8 to $5.60 per share this quarter. The share surged 3.2% in midday trading.

Increased client activity and the improved market value of the stock and bond segment also boosted real earnings. Credit products and mortgage bond trading business yielded higher returns. The investment and lending unit earned $2billion against a$872 million last year.

Almost all business segments of Goldman Sachs Group, Inc.(NYSE:GS) showed improvements. All in all, revenue jumped 53% to $9.2 billion expenses were at 21% of revenues which is almost 50% of what the bank pays to its employees. Goldman Sachs Group, Inc.(NYSE:GS) compensation expense receded the fourth quarter to 11% compared to last year.

In 2009 Goldman Sachs Group, Inc.(NYSE:GS) paid as much as 35.8%of revenues as salaries to its workers. It was a record year of earnings revenue. Amid declining revenues the figure has hovered around 42% of revenues (on average) for the last five years. On average a Goldman Sachs Group, Inc.(NYSE:GS) employee earned $399,506 during the year 2012. This was some 8% up from the per employee layout of $367,057 for 2011.

The salary cuts contributed 16.5% of fourth quarter return on equity. Last year the bank earnings increased as slashed head counts and salaries profited shareholder’s wealth.

Goldman Sachs Group, Inc.(NYSE:GS) shares went up 4.06% to $141.09.

Morgan Stanley (NYSE:MS) were up 0.54% to $20.54.

Jake Emen

Jake Emen is a writer residing in Houston, Texas. He has written numerous articles, some for the Washington Post, USA Today, the LA Times, and the Houston Chronicle. One of AC s Top 100 Content Producers, Carly Hart s interests include news, politics, parenting, frugal living and consumer related issues. He acted as a customer advocate and has extensive experience working on Wall Street. As a highly acclaimed industry leader, he has been a catalyst for public education and accessability of financial services.