Fourth quarter net revenues were $6.05 billion, and net earnings were $1.01 billion or $1.84 EPS. The annualized return on equity was 5.8% for the fourth quarter. Management talked about the year being dominated by global macro-economic concerns, impacted risk tolerance of clients, and other challenges. Thomson Reuters had estimates of $1.24 EPS and 6.54 billion in revenues.
Here were the quarterly highlights by unit:
- Net revenues in Investment Banking were $857 million for the fourth quarter of 2011, 43% lower than the fourth quarter of 2010 and 10% higher than the third quarter of 2011.
- Net revenues in Institutional Client Services were $3.06 billion for the fourth quarter of 2011, 16% lower than the fourth quarter of 2010 and 25% lower than the third quarter of 2011.
- Net revenues in Investing & Lending were $872 million for the fourth quarter of 2011.
- Net revenues in Investment Management were $1.26 billion for the fourth quarter of 2011, 16% lower than the fourth quarter of 2010 and 3% higher than the third quarter of 2011.
- Compensation and benefits expenses (salaries, discretionary compensation, amortization of equity awards and other items such as benefits) were $12.22 billion for 2011, down 21% from 2010. The ratio of compensation and benefits to net revenues for 2011 was 42.4%. Total staff count was down 7% compared with the end of 2010.
The good news about this quarter is that the investment bank made money at a time when estimates were coming down extremely fast. The bad news is that the quarter was far from an attractive one compared to normalized quarters.
Book value was $130.31 per common share and its tangible book value was $119.72 per common share. Unfortunately, book value in banking today is a ceiling rather than a floor. Shares are indicated up 1.3% at $98.99 against a 52-week range of $84.27 to $171.49.
JON C. OGG
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