Goldman cuts pay and boosts its dividends

GOLDMAN Sachs slashed costs and boosted its dividend by over 31 per cent to 46 cents yesterday as it unveiled first-quarter results that beat expectations.

Profits and revenues were down compared to the first quarter of 2011 earlier but, like its rivals, Goldman saw a significant bounceback in business compared to the end of last year.

The bank also cracked down on costs, laying off 900 people in the quarter so that it has now shrunk its workforce by 3,000 over a year.

That brought its total pay pot down by 16 per cent to $4.4bn, although that was still nearly double what it had to pay out in the fourth quarter.

Revenues were down 16 per cent to $9.9bn year-on-year, but up 64 per cent compared to a quiet fourth quarter of 2011, when investors sat on their hands due to the euro crisis.

Similarly, net income was down 23 per cent to $2.1bn, but that was more than double what the bank made in the fourth quarter.

The recovery was driven by a strong rise in debt underwriting revenues, which more than doubled, and higher trading volumes in fixed income and equities, where revenues rose 154 per cent and 100 per cent respectively.

Chief executive Lloyd Blankfein said: “Stronger global markets, together with the firm’s deep and broad client franchise, drove improved results across most of our businesses.”

Markets have been boosted in 2012 by a €1 trillion cash injection by the European Central Bank in December, which freed up interbank markets.

On a call with analysts, however, chief financial officer David Viniar warned that there have been signs in the last fortnight that the effects of the ECB action are already wearing off.

“Two weeks doesn’t really tell you anything but [the euro crisis] has had somewhat of a chilling effect in Europe as markets stalled,” he said.