The American finance company recently released their earnings report on Thursday showing a positive report compared to the past two years. Goldman Sachs delivered and reported a strong fourth quarter as expected by investors and other finance research firms and topped the list of the financial firms with the completed mergers and acquisitions of for the whole year.
Fourth Quarter Earnings
The bank announced a revenue of $8.17 billion from analysts’ expectations of $7.72 billion, showing earnings per share of about $5.08, which was 6% higher than the same quarter last year. Goldman Sachs initially forecasted $4.82 earnings per share and revenue of $7.742 billion.
Net revenue under the Investment Banking for the fourth quarter was $1.49 billion lower than the previous year quarter net revenue by 4%, while the bank’s full year net revenue also declined by 11% to $6.27 billion compared to 2015. Total net earnings amounted to $2.35 billion.
Revenue from bonds trading surged up by 78.3% to $2 billion compared to last year, given a much better market conditions and the recent interest rate hike signal from the Federal Reserve.
Most investors believed that the jump in the EPS was led by the surge in the shares of Goldman Sachs following the result of the recent US presidential elections.
From expectations of around 11.2% in Goldman, it delivered an 11.4% return on equity this fourth quarter.
Aside from their revenue and net profit, the company also reported in the statement that the company reduced their workforce last year by 6.5% from 36,800 to 34,400, while the company’s non-compensation expenses plummeted by 44% during the fourth quarter.
In a statement, CEO Lloyd Blankfein said that the company continually managed the bank’s expenses to face the challenging year ahead.
Goldman Sachs Shares
A few days ago, shares of the American banking company declined from the 33% climb after the announcement that Goldman Sachs has reached an agreement to pay $5 billion in fines to the US Department of Justice over civil claims of the selling mortgage-backed securities back in 2005 to 2007, similar to the allegation that Deutsche Bank faced.
Shares inched down as Goldman Sachs said in a statement that their earnings for the fourth quarter will be less than around $1.5 billion after tax, following the $2.385 billion civil penalty fee, another $875 million worth of cash payments, and consumer relief worth $1.8 billion.
Prior to the announcement of the presidential elections, Goldman Sachs shares were trading around $169-$175. Then, the stock surged to more than 30% after Trump’s victory to as high as $247.92 before it slid down for two consecutive sessions to $238 per share. GS shares then closed higher at $234.18, from opening earlier in the day $233.50. The current outlook of Trump’s initial plans to boost the country’s economy currently gives the bank a leverage, although the following few weeks will be met with a rising political uncertainty to which the rally in Goldman shares has slowed down recently, as Trump takes his seat as the 45th president of the United States. Slower global economic growth also adds to the company’s current challenging environment for the first quarter.