By Graeme McNaughton
Analysts are predicting that investment bank Goldman Sachs is expected to pay out between US$13.3 and 13.8 billion in salaries and bonuses to its employees for 2012, despite an economic slump that has taken a dramatic toll on world markets.
Brad Hintz, an analyst with Sanford C. Bernstein, told the Wall Street Journal he expects the average wage of a Goldman Sachs employee to be approximately US$418,000.
This is up from 2011, when Goldman Sachs paid out US$12.22b in salaries and bonuses. Employees that year saw an average salary of US$353,000.
Goldman Sachs is expected to be release its official earnings report tomorrow for the fourth quarter of 2012. Analysts are expecting the report will also indicate profits nearing US$2b.
These numbers, along with the numbers for competing investment firms such as Morgan Stanley and JPMorgan Chase, are likely to be similar despite the current economic climate.
“I think at the end of the day, [Goldman Sachs] is going to have numbers very much in line with what the other banks are going to report,” Luis Seco, the director of the mathematical finance program at the University of Toronto and the CEO of Sigma Analysis and Management, told Humber News on Tuesday.
Seco said that if the bank is paying out billions in salaries and bonuses, then the company likely made at least twice that in revenue.
Earnings report Wednesday
Goldman Sachs is not commenting on the numbers until they officially release their fourth quarter earnings report tomorrow to shareholders.
“The numbers you’ve seen are just projections from analysts,” said David Wells, a spokesperson for Goldman Sachs. “That’s them just guessing what we’ll report.”
The rise in profits come after a slow economic year.
The International Monetary Fund forecasted 2012 would see the world economy slow down, with world GDP growth slowing from 6.25 per cent in 2011 to 5.75 per cent for 2012, according to an April report.
However, Seco said bank profits don’t always fall when the world economy is slowing down.
“Banks tend to do well when everyone else isn’t doing well,” said Seco. “One of the interesting aspects of the banking sector is that the economy may be doing badly, but the banks will continue to do well.
“It’s unavoidable that the compensations are then going to be high.”