Goldman Sachs more than triples profits in fourth quarter, as bond trading helps boost bank's bottom line

 
Hayley Kirton
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It was a tricky first half of the year, said Lloyd Blankfein (Source: Getty)

Goldman Sachs has more than tripled its profits in its fourth quarter of the year, thanks to bond trading giving its bottom line a boost.

The figures

The US banking giant announced net revenues for its fourth quarter of $8.2bn (£6.7bn), up 12 per cent on $7.3bn for the same period the year before, and net earnings of $2.3bn, a leap of 207 per cent from $765m the year before. Diluted earnings per share were $5.08.

For the full year, the bank reported revenues of $30.6bn, down nine per cent on $33.8bn the year before, and net earnings of $7.4bn, up 22 per cent on $6.1bn. Diluted earnings per share were $16.29.

Analysts polled by Yahoo finance had predicted annual revenues for the bank of $30.3bn and earnings per share of $15.81. Meanwhile, revenues for the quarter were estimated at $7.7bn and earnings per share at $4.82.

Shares in the bank were down 0.3 per cent at $235.00 in pre-market trading.

Why it's important

Goldman Sachs has the rocky markets to thank for its better than expected quarterly performance, as revenues from trading in its fixed income, currency and commodities division ballooned to $2bn, a rise of 78 per cent year-on-year.

The story was similar at Morgan Stanley yesterday, which reported revenues in the same income stream had tripled in the same time period, thanks to a busy market for bonds around the time of the US election.

Banks' finances are also being squeezed in all directions at the moment, with historically rock bottom interest rates pushing on revenues and increasing red tape driving up costs.

However, Goldman Sachs does look like it is turning a corner. Its yearly operating expenses for 2016 were the lowest the bank had recorded since 2008, as well as being the lowest non-compensation expenses since 2007.

What Goldman Sachs said

Lloyd Blankfein, chairman and chief executive, said:

After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved. We continued to manage our expenses carefully and we enter the new year with industry leading positions across our businesses, as well as strong capital and liquidity.

In short

Bonds are helping to bolster banks' bottom lines this season.

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