After reporting its first quarterly loss since going public a decade ago, Goldman Sachs Group Inc.'s chief financial officer said Tuesday that the New York company is working on ways to increase its deposit base.
Goldman, which together with Morgan Stanley became a bank holding company in September as the credit crisis deepened, leaving the pair as the last independent investment banks, plans to add $50 billion to $100 billion in deposits next year, David Viniar told reporters during a Tuesday morning press conference. The company has roughly $150 billion in deposits, according to a report by Marketwatch.
Mr. Viniar spoke after Goldman swung to a fiscal fourth-quarter net loss of $2.12 billion, or $4.97 a share, on slumping results in its trading and principal investments business. A year earlier, it had reported net income of $3.22 billion, or $7.01 a share.
"We have been an investment bank for 139 years, and a bank holding company for three months," so the firm needs more time to work through its business plan, Mr. Viniar said. Goldman plans to gather deposits through private wealth management and third-party channels. However, Mr. Viniar said that it will not make an acquisition to expand its deposit base.
For the quarter ended Nov. 28, Goldman reported net revenue was negative $1.58 billion, compared with positive $10.74 billion a year earlier. Analysts polled by Thomson Reuters had expected a loss of $3.73 a share on revenue of $932 million.
For the full year, it reported net revenue of $22.22 billion and income of $2.32 billion.
"While our quarterly performance obviously didn't meet our expectations, Goldman Sachs remained profitable during one of the most challenging years in our industry's history," chief executive Lloyd Blankfein said during a conference call to discuss results.
Analysts had said they expected a big chunk of the government bailout money that large banks received to be put toward fourth-quarter writedowns and loss provisions. Goldman Sachs got $10 billion from the government's Troubled Asset Relief Program.
Investment banking revenue slid 48% and financial advisory revenue dropped 54% amid a decline in completed mergers and acquisitions industrywide. Goldman said its investment banking transaction backlog fell during the quarter and ended the year "significantly lower" than at the end of 2007.
Revenue plunged to negative $4.36 billion at Goldman's trading and principal investments business, from revenue of $6.93 billion a year earlier. Equities revenue gained 2% as losses in principal strategies failed to offset higher revenue from derivatives.
Meanwhile, the principal investments group recorded a net loss amid losses on corporate and real estate investments.
The asset management and securities services division, which includes lending and other services to hedge funds, reported a 5% drop in revenue, and profits fell 19% due to lower fees amid market depreciation and outflows in assets. Until recently, Goldman had been known as having a magic touch after a correct bet that subprime mortgages would crater and its nimble avoidance of other messes. But it is facing danger from its heavy exposure to the equity markets, which have fallen roughly one-third this year, and from its "book" of distressed investments, which include stakes in everything from troubled auto loans in Thailand to struggling golf courses in Japan.
The company has said it will cut about 3,250 jobs, or 10% of its work force, to save on costs.
Goldman cut its Dubai-based work force this month in line with the 10% global reduction.