Published January 16, 2014
Hurt by tumbling fixed-income revenue, Goldman Sachs (GS) posted a 19% drop in fourth-quarter profits on Thursday, but the Wall Street heavyweight's results still managed to exceed forecasts.
Goldman said it earned $2.33 billion in the fourth quarter, compared with $2.89 billion the year before. Per-share earnings fell to $4.60 from $5.60. Analysts had been calling for EPS of just $4.22.
Revenue dropped 4.9% to $8.78 billion, blowing away the Street’s view of $7.71 billion.
"Our work in advancing our client franchise and in ensuring continued cost discipline has allowed us to provide solid returns even in a somewhat challenging environment," Goldman CEO Lloyd Blankfein said in a statement.
Just as Citigroup’s (C) results revealed on Thursday, Goldman struggled in its fixed income, currencies and commodities business. The bank said FICC trading revenue slid 15% year-over-year to $1.72 billion due to significantly lower mortgage revenue as well as declining interest rate product, currency and commodity revenue.
Revenue for this division was up 38% from the third quarter. Still, Goldman said “economic uncertainty persisted and levels of activity generally remained low.”
Goldman said operating expenses fell 2% in 2013 to $22.47 billion. Compensation and benefits expenses decreased 3% to $12.61 billion for 2013 and the ratio of compensation to net revenue dipped to 36.9% from 37.9%.
"We believe that we are well positioned to generate solid returns as the economy continues to heal and provide considerable upside for our shareholders as conditions materially improve,” Blankfein said.
Shares of New York-based Goldman barely budged despite the earnings beat, recently trading up 0.13% to $178.99 in premarket trading. Goldman’s shares have advanced about 27% over the past 12 months.