Goldman's Viniar Comments on Outlook, Buybacks, Compensation
By Christine Harper
Sept. 12 (Bloomberg) -- David Viniar, chief financial officer of Goldman Sachs Group Inc., comments on the New York- based firm's third-quarter profit and the outlook for its businesses. He spoke on a conference call with reporters and in an interview.
Goldman Sachs, Wall Street's most profitable firm, said today that net income fell 1.4 percent to $1.59 billion, or $3.26 per share, beating analysts' estimates.
On outlook:
``The near-term business outlook remains very difficult to predict. The global economy continues to grow but there is clearly a fair amount of uncertainty in the markets, and how that's going to affect corporate and investor confidence is unknown.
``Looking out to the medium term, we remain optimistic about the firm's competitive position and our prospects. We see opportunities in virtually all our businesses and geographies and we're confident that we have the strength of our franchise and our people to take advantage of them.''
``Besides the backlog, which is deals that we think have a high probability of closing, there's a lot of early dialogue with companies as well.''
On outlook for equity offerings in the fourth quarter:
``There are a lot of deals on the calendar expected to be done over the fourth quarter, and it's really going to be a question of whether the markets hold up. As we sit here right now these are deals that are still on the calendar, still expected to be done, some on roadshows, some are about to go, and we're hopeful that they'll all get done. But I can't tell you for sure.''
On decline in the ratio of compensation to revenue:
``Our revenues are up 51 percent year to date. And so when we look out to what we thought the year-end comp ratio would be, 48 percent's a better estimate than 49 percent given the strength of the revenues.''
On the increase of investment banking revenue:
``In the highest margin transactions we're the leader in the business.''
``Over time if the volume of deals falls it will affect our business. We didn't see it, our volume has stayed pretty consistent.''
On priority areas of investment:
``We're growing across the board. We're definitely growing fastest in Asia, second in Europe, third in the U.S. But remember the basis we're starting from is the inverse of that. But we see the fastest growth happening in Asia for sure.''
On number of employees leaving:
``Our attrition rate this year overall has been close to the same and a little bit lower than it was last year -- but a teeny bit, I would say it rounds to the same.''
On Goldman's investment in Sumitomo Mitsui Financial Group Inc.:
``Sumitomo as you've seen has been fairly successful. We hedged the first third of it last year, we are largely through hedging the second third of it so we have a little more than a third unhedged as we sit here today. It's been very successful. We continue to be quite bullish on Sumitomo and on Japan.''
On Goldman's investment in Industrial & Commercial Bank of China:
``As far as ICBC goes, that investment is still private so it's still held at cost. But as you've read in the paper and we've read in the paper, they are at least planning to go public in the fourth quarter and if that happens we will then have it on a mark-to-market like anything else.''
On terms of the ICBC investment:
``We have restrictions on hedging which will last out over the course of three years.''
On pace of share repurchases:
``You might see an increase in the fourth quarter -- and it doesn't represent a change in philosophy at all -- it's just that in the fourth quarter when we pay compensation we pay a fair amount in equity. Therefore our equity will increase, our shares will increase because of that and so we will offset that with buybacks.'' |
