Goldman Sachs Group Inc posted a 53 percent decline in fourth-quarter profit as trading revenue tumbled, dashing hopes that the Wall Street bank had bucked a tough trading climate in debt markets. Bond trading revenue, including commodities and currencies, slid 39 percent from the third quarter as worries about European sovereign debt and rising US Treasury yields kept investors on the sidelines.
Profit fell for a third straight quarter, and revenue fell short of estimates, with year-over-year declines in investment banking and most other business segments. Viniar said Goldman's backlog of investment banking business fell from the third quarter, which may dampen revenue in the current quarter. Goldman shares closed down $8.19, or 4.7 percent, at $166.49 on the New York Stock Exchange, their biggest one-day percentage decline since last April 30, Reuters data showed.
Results weighed on other stocks, as the Standard & Poor's financials index closed down 2.2 percent, while broader US stock market indexes dropped more than 1 percent. The results capped a year that has tested Goldman Chief Executive Lloyd Blankfein, and also tested the bank's reputation for having the smartest bankers on Wall Street.
Goldman has been criticised for activities such as its management of a private offering by social networking company Facebook Inc, and its marketing of a mortgage-related security that led it to pay $550 million to settle regulators' civil fraud allegations last July. Goldman said it would pay out nearly 40 percent of full-year revenue in the form of compensation and benefits, a higher percentage than in 2009, though 2010 profit fell 37 percent and revenue declined 13 percent. Compensation per employee dropped 14 percent to about $431,000. Quarterly net income after payment of preferred stock dividends fell to $2.23 billion, or $3.79 per share, from $4.79 billion, or $8.20 per share, a year earlier. Net revenue declined 10 percent to $8.64 billion.
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