Goldman not satisfied with 11 percent shareholder returns-CFO

Wed Jan 16, 2013 12:09pm EST

Jan 16 (Reuters) - While Goldman Sachs Group Inc's financial performance was relatively good in a tough business environment last year, the Wall Street bank intends to do better, incoming Chief Financial Officer Harvey Schwartz said on Wednesday.

When asked whether Goldman's return-on-equity of 11 percent in 2012 was a good proxy for how the company should be expected to perform in challenging markets, Schwartz said management is not satisfied.

"It is not particularly aspirational," said Schwartz, who hosted Goldman's quarterly earnings conference call for the first time. "We would like to do better."

Return on equity is an important measure for shareholders because it shows how well Goldman can squeeze profits from its balance sheet. The 11 percent figure was far better than the previous year, when Goldman's return-on-equity was a measly 3.7 percent, but still well below levels above 30 percent in its heyday.

Goldman's fourth-quarter earnings nonetheless beat analysts' expectations, due to big gains on the bank's investments and a sharp decline in compensation as a percentage of revenue.

Goldman will continue to consider shareholder returns when making compensation decisions in future years, Schwartz said. He attributed most of Goldman's gains in 2012 to cost-cutting plans that began nearly two years ago.

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