Goldman CFO still cautious about financial sector Goldman Sachs still cautious about financial sector despite topping earnings' forecast NEW YORK (AP) -- Goldman Sachs Group Inc.'s chief financial officer David Viniar said Tuesday the bank remains cautious about the financial sector in the near term, despite reporting a first-quarter profit that easily surpassed expectations In a conference call with investors, Viniar said there are still "headwinds" in the broader sector tied to declining asset values. Viniar's caution comes a day after New York-based Goldman announced it earned $1.66 billion, or $3.39 per share, during the first quarter. Analysts polled by Thomson Reuters had forecast earnings of $1.64 per share for the January through March quarter. The bank also said it planned to raise $5 billion in stock to help it pay back government bailout funds. Despite the uncertainty still surrounding the financial sector, Goldman said it plans to repay its $10 billion loan from the government as soon as possible, with help from the stock sale as well as additional reserves. Goldman has one of the strongest capitalizations in the banking sector, which it could tap even amid its cautious outlook. "Given the challenging fundamental backdrop in the global economy, we continue to be cautious about the near-term outlook for our businesses," Viniar said. Goldman has relatively little exposure to risky assets remaining on its balance sheet, Viniar noted. Goldman has long been considered one of the strongest banks amid the credit crisis and its exposure to the riskiest assets that have plagued banks since late in 2007 has been less than many of its competitors. Viniar said Goldman's legacy leverage loans on its balance sheet now total $2.3 billion, compared with about $52 billion during the third quarter of 2007 when markets began to unravel. Those $2.3 billion remaining on its books are marked down to an average of about 50 cents on the dollar, Viniar added. Goldman's profit was not boosted during the quarter by a reversal in asset prices either. Viniar said the bank took virtually no reversals on write-downs it had previously taken on illiquid assets as pricing remains weak. Viniar's cautious outlook about the banking sector is similar to the caution Wells Fargo & Co.'s CFO Howard Atkins provided after the San Francisco-bank said last week that it expects to report a record $3 billion first-quarter profit. Atkins said it was still too early to conclude the economy has turned around. Goldman's first-quarter performance put it in a strong enough position to plan the public stock offering of $5 billion which it said would be used, with additional resources, to pay back the government debt. Goldman received $10 billion in government funds during the downturn last fall as part of the U.S. Treasury Department's program to invest directly in hundreds of banks and try and help alleviate the nearly frozen credit markets. Goldman priced the $5 billion stock offering at $123 per share, a discount of 5.5 percent to Monday's closing price of $130.15. Goldman said it has the option to sell an additional $750 million in stock to cover over-allotments. Shares of Goldman fell $7.22, or 5.6 percent, to $122.93 in early morning trading Tuesday. Viniar reiterated the bank's plan to repay the $10 billion as soon as it can. He said the government must first complete its stress test on the bank before it can hammer out terms for a repayment with the Treasury Department. The government is running stress tests on the nation's largest banks to determine if they need any additional capital based on various economic scenarios. Those tests are expected to wrap up by the end of the month http://finance.yahoo.com/news/Goldman-CFO-still-cautious-apf-14919675.html?sec=topStories&pos=5&asset=&ccode=
