Goldman Reports Massive $0.84 Loss Per Share, Prop Trading Loss Of $2.5 Billion, Comp Accrual Of $358,713 Per Employee

Tyler Durden's picture

Topline bloodbath Summary: Net revenues in Investment Banking were $781 million, 33% lower than the third quarter of 2010 and 46% lower than the second quarter of 2011. Net revenues in Financial Advisory were $523 million, up slightly from the third quarter of 2010. Net revenues in the firm’s Underwriting business were $258 million, 61% lower than the third quarter of 2010. Net revenues in both equity underwriting and debt underwriting were significantly lower than the third quarter of 2010, reflecting a significant decline in industry-wide activity. The firm’s investment banking transaction backlog increased compared with the end of the second quarter of 2011. Net revenues in Institutional Client Services were $4.06 billion, 13% lower than the third quarter of 2010 and 16% higher than the second quarter of 2011. Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.73 billion, 36% lower than the third quarter of 2010. And so on. As for the number everyone in #OWS is looking for, "The accrual for compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as benefits) was $1.58 billion for the third quarter of 2011, a 59% decline compared with the third quarter of 2010. The ratio of compensation and benefits to net revenues for the first nine mo nths of 2011 was 44.0%. Total staff levels decreased 4% compared with the end of the second quarter of 2011." In a nutshell: for the first time in probably since the Lehman crisis, Goldman reported a massive loss in its prop trading division of $2.5 billion, and also based on LTM accured comp benefits and the total staff at period end of 34,200, average compensation amounted to $358,713/employee.

P&L breakdown:

And the carnage visually:

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Fips_OnTheSpot's picture

Bloodbath in DAX already

LeonardoFibonacci's picture

Time to pray the Lloyd's (sic) prayer or"God's work here then is "The Goldman Prayer":

Our chairman who art at Goldman
Blankfein be thy name
Thy rally’s come, God’s work be done
In the Dow as it is in the Nasdaq
Give us this day our daily gain
And forgive us our frontruning, as we punish those who frontrun against us
And bring us not under indictment
But deliver us from regulators
For thine is the cashflow, and the power, and the bonuses, forever and ever. Amen

Dental Floss Tycoon's picture

And God said, "Bless you Goldman."  And Goldman gained 2 percent.

sqz's picture

Astonishingly, there does not appear to be any DVA (Debit Value Adjustment) gain in the Vampire Squid's books. If it is there, its mighty small compared to Bank of America's astonishing booking of $1.7 bn direct DVA and a further $4.5bn of "fair value adjustments on structured liabilities ... reflects the widening of the company's credit spreads".

So, a grand total of mind-boggling $6.2bn of booked profits against losses on the company's own liabilities and credit spread widening!

LeonardoFibonacci's picture

DVA is only for banks that are lenders which Goldman is not!

sqz's picture

Actually, it turns out that Goldman Sachs did have a DVA gain of $450 million but they hedged it all out by selling CDS on a basket of highly correlated peers in order to reduce their earnings volatility.

To some, having to account for an artificial gain (which nevertheless hits tangible equity so therefore can be used for compensation) is already unbelievably perverse.

But now, arguably, it is even worse when you actually act on DVA by hedging it so that you add not only to your default risk (you've just sold protection) but increased sector and systemic risk!

DVA is a monstrosity that should not exist, though it probably pales next to some other CVA modeling assumptions and hedging activity which cannot be uniformly accounted for by auditors.

Vengeance's picture

Beautiful prayer. I'm sure they're saying a few of those to the Fed as perhaps we just saw the equation of {No POMO=No Risk Free Profit=Loss on 'Prop' Trading} at work...

MonsterBox's picture

Dude, that's a gift.  well done!

MolotovCockhead's picture

When the judgement day comes TBTF will need more than prayers to protect them. Bullet proof vest won't even protect them......not against pitch forks, tar, feathers, and manila rope!

Oh regional Indian's picture

Leonardo, that is simply brilliant. Brilliant stuff! You own?


Thoughts and Lessons @ OWS

MassDecep's picture

"Thy rally’s come, God’s work be done"

Should be "Satans work be done"

Tsunami Wave's picture

That made my day... thank you.. lmao

SixFeetFromTheHedge's picture

My charts going vertical on this news :)

Fidel Sarcastro's picture

HOW BIG will the BONUS pool be...cause there still will be BONUSES despite the LOSSES!

GeneMarchbanks's picture

Staged. This is worthy of Shakespeare.

They're probably buying CDS on themselves....

spanish inquisition's picture

Agree. An opportunity to clean out all the losses throughout the business lines. Better bang for the buck using accounting shifts next quarter and seem human this quarter. Besides, who is gonna remember or care tomorrow that....G..Gold, Goldman. lost. lost something in the.. 3rd inning? no. something else.. Give me a sec, I'll get it..

Edit: This also plays nicely into the "Hey, how can we be committing fraud if we are losing money defense"

quark288's picture

Atleast GS had the temerity to report a loss unlike the fraudsters in Citi and BOA....

bartek's picture

Do not believe this loss. They have used some accounting gimmick to hide the money in order to reduce public discontent.

It would be bad politics to report huge profits when OWS is downstairs.

citrine's picture

It does look a lot like a strategic event.

Solid's picture

That is the first thing I thought of when I read this.
I don't buy it.

dracos_ghost's picture

I agree. They probably traded most of their stuff as a counterparty to their Isle of Tax Invisibiliy in the Wherethefuckarewe ocean to avoid US taxes.

pepperspray's picture

Its a Tuesday, the markets are fine.

El Gordo's picture

I this another green chute?

EZT's picture

Why is this bad for markets..?

beaker's picture

Maybe because people are figuring that if these "insider" guys can't make money in this clusterfuck called the capital markets, what chance do they have?

junkyardjack's picture

Well their stock is up so I guess losses are the new profits

jm's picture

FICC results, equities, everything just dismal. 

Mitch Comestein's picture

Last week, FAZ swan dive.  This week, FAZ rocket ship.

JohnG's picture


LeonardoFibonacci's picture

Blankfein you bastard

bigdumbnugly's picture

so goldman is taking the "poor little goldman sachs is not the all-powerful" route instead of fudging numbers around like the others.

well, let's see what that gets them.

ss123's picture

Doing god's work is getting more difficult everyday.

The Axe's picture

Squid is back on the menu BOYS!!!

gigeze787's picture

GS bad news to get the stock cheap enough to go private and give up bank status...?

EZT's picture

fried calamari greek style

Irish66's picture

Bank of China gave them a nice balck eye

John Bull's picture

Fuckers! Staged! Theatre! Too afraid to show any profits! Taken a loss now and when the smellies have left Wall Street they will post even bigger profits...

Esso's picture

"Fuckers! Staged! Theatre!"

I agree. I always wondered why those stupid MFers would gloat about record profits, record bonuses, record this & that in the worst economy ever. That's a sure-fire way to end up on the end of a rope when everybody else is starving.

So, why not play poor-mouth and tell everyone you're struggling, while raking in your record profits & bonuses and just keep your friggin' mouth shut and not bear the wrath of the peons? What, you think the goobermunt will prosecute them for lying? Think again.

Hell, the bonus plan is they can then whine to the goobermunt for more taxpayer-funded bailouts because they're TBTF, making for record-record stealth profit & bonuses.

ss123's picture

When the money you make become more worthless everyday, there comes a time to just say screw it, and move into a shack by a pond and fish all day.

GeneMarchbanks's picture

There's nothing wrong with that.

PaperBear's picture

Not so 'Master of the Universe' are they now.

PaperBear's picture

Watch CFTC bottle the position limits decision today.