Goldman Sachs has responded definitively to public and government anger over bonuses by setting last year’s compensation ratio at the lowest level ever during its time as a public company, even as it reports booming profits. 

During the quarter ending 31 December, the bank reduced compensation and benefits by $519 million in order to fund a $500 million charitable contribution, bringing compensation and benefits for the year down to $16.19 billion, or 35.8 per cent of net revenues.

This is a marked change from last October, when the bank said it had ring-fenced $5.35 billion for compensation and benefits over the third quarter.

As a whole, Goldman Sachs’ net earnings applicable to common shareholders surged, from a base of $3.03 billion as at 25 September 2009, to $4.79 billion at the end of last year. This was achieved on net revenues of $9.62 billion for the quarter.

In the three months ending on 31 December, the Wall Street firm posted net revenues of $1.57 billion in asset management and securities services, up by 8 per cent from $1.45 billion in the previous quarter, but down 10 per cent from $1.74 billion in the quarter ending 28 November 2008.

Total asset management net revenues were $1.13 billion for the last quarter of 2009, up 19 per cent from the quarter ending 28 November 2008.

Assets under management at the Wall Street bank increased by $23 billion to $871 billion in the fourth quarter of last year, as $11 billion of market appreciation added to $12 billion of net inflows.

“Despite significant economic headwinds, we are seeing signs of growth and remain focused on supporting that growth by helping companies raise capital and manage their risks, by providing liquidity to markets and by investing for our clients,” said Lloyd Blankfein, Goldman Sachs’ chairman and chief executive officer. 

Goldman Sachs Tier 1 capital ratio, a key measure of a bank's financial strength, was 15 per cent at 31 December, up from 14.5 per cent as of 25 September 2009.