Increased revenues by stronger trading in equities offset losses because of bonds trading at Goldman Sachs which helped the bank to report better than expected revenues. This is till now the only Wall Street bank that has reported growth in revenues for the fourth quarter of last year.
Compared to the results of Goldman, the fourth quarter results for the trading units at JPMorgan Chase and Citigroup reported negative growth because any revenue gains from the stocks trading were offset by heavy losses in bond trading.
There was a rise of 2 per cent in the overall trading revenue in the three months ended December at Goldman which is at greater risks to fluctuations in the market compared ot other Wall Street banks.
At Goldman, here was a 17 per cent increase in revenues from equities trading at $1.60 billion while there was an 18 per cent drop in the revenues from bond at $822 million which is well below the peak revenues it reached at more than $6 billion.
On the other hand, there was a 21 per cent drop in the revenues in bond trading for Citi group while there was a 16 per cent drop in the same number for JPMorgan in the fourth quarter last year. There was increase in equities trading at both banks.
For the three months ended Dec. 3, Goldman also reported net earnings attributable to common shareholders at $2.32 billion or $6.04 per share. In the same period a year ago, the same figure for the company was a loss of $2.14 billion or $5.51 per share.
According to IBES estimates from Refinitiv, a profit of $4.45 per share was being expected by analysts even though it was not clear whether the numbers could be compared.
The year-ago results included a one-off charge related to a change in U.S. tax laws.
According to IBES data from Refinitiv, the estimated total net revenue for Goldman was at $7.63 billion while the bank notched up net revenues of $8.08 billion, well above the average estimates of analysts.
The better than expected results reported by the saw its shares rising by 3.4 per cent in early trading. Over the last 12 months, there has been a drop of about 30 per cent in the shares of Goldman with the fourth quarter accounting for a drop of about 25 per cent in the share prices following the name of the bank and a couple of its former employees being dragged into the 1MDB scandal in Malaysia.
In the statement issued to the media, Goldman did not mention any of the expenses that it has had to incur for related to the 1MDB scandal. It however said that the matter would be elaborated upon by its Chief Executive Officer David Solomon in his interaction with analysts.
(Adapted from EuroNews.com)