Bank results show new order on Wall St

Earnings reports from Goldman Sachs,Citigroup highlight political,financial obstacles facing each bank....

Earnings results from two US financial behemoths underscored the new order taking shape on Wall Street,as its strongest banks post huge profits while other once-mighty players continue to strain under losses from souring loans.

A year after dozens of banks accepted billions in taxpayer bailouts to avoid being swept away by the financial crisis,Goldman Sachs and Citigroup on Thursday reported how they had fared in over the summer. Earnings at both beat expectations,but they also highlighted the political and financial obstacles now facing each bank.

At Citigroup,which is still on government life support,spiraling consumer losses overwhelmed strong trading results. The banks headline earnings number net income of 101 million came before it accounted for 288 million in preferred dividends and a debt exchange that gives Washington 34 per cent of earnings. After including the items,the loss to stockholders was 27 cents a share,or 3.2 billion,compared with a loss of 61 cents a share,or 2.9 billion,in the third quarter a year ago.

Meanwhile,quarterly performance at banking giant Goldman Sachs cemented its status at the top of the financial heap,alongside JPMorgan Chase. On Wednesday,JPMorgan reported another profitable quarter,igniting a rally in stock markets.

Goldman,which repaid its 10 billion government bailout in June,reported that trading gains and corporate investments contributed to a 3.19 billion profit in the third quarter. In announcing its results,Goldman promptly went on the defensive about its bonuses. In part to allay criticism of its profits and bonuses,Goldman announced a 200 million contribution to its foundation,which promotes education. Goldman also disclosed how much it had set aside for its annual bonus pool. It said that it had earmarked 5.35 billion in compensation and benefits,an increase of 84 per cent from the year earlier period,putting it on course for a record payout by the end of 2009.

During a conference call,Goldmans chief financial officer,David A Viniar,rejected criticism that the banks high bonus levels ignored the tougher times experienced by other people elsewhere in the economy.

By paying the bonuses,Viniar said,Goldman was trying to make a difficult trade-off between being fair to our people who have done a remarkable job.