Revenue at Goldman Sachs Beats the Street, Profit Down
- Updated: January 20, 2016
Revenue for the fourth quarter at Goldman Sachs beat estimates of analysts as its fees from its advising arm for mergers spiked by 27%. Net incomes however plunged by 65% due to the cost of settling a probe into the firms mortgages.
Revenue fell by 5% to end the quarter just short of $7.27 billion, which was more than $7.17 billion that analysts had estimated for the quarter.
Net income dropped to just over $765 million, which is equal to $1.27 a share, in comparison to the fourth quarter of 2014 of $2.17 billion equal to a per share rate of $4.38.
This came following an agreement the firm made to settle a probe by U.S. regulators into the handling by the bank of its securities that were mortgage-back. The agreement lowered the earnings for the quarter by over $1.54 billion, said the company, which is based in New York City.
The merger business for Goldman Sachs was able to benefit from the number of deals during 2015 that took place around the world. In all, mergers equaled more than $3.8 trillion during 2015, which surpassed the record that was set previously during 2007, which took place before the deep recession and financial crisis of 2009.
Last week, Goldman Sachs said that it had reached an agreement in principle of $5.1 billion in its mortgage case. That ended up cutting the profit and ending the year with a record amount of both litigation and legal costs for the bank.
Lloyd Blankfein the CEO at Goldman Sachs said the bank’s diversified mix of business allowed it to deliver solid results for a year that was characterized by uneven economic activity globally.
Shares at Goldman Sachs dropped early on Wednesday by 1.4%.
Revenue at the firm from investment-banking was higher by 7% ending the quarter near $1.55 billion, as its revenue from its advisory arm climbed from a year ago of $692 million to this year’s $879 million.
For the full year 2015, merger fees increased by 40% to end December at $3.47 billion, which is the highest the firm has reached since 2007.
Blankfein, who is 61, has resisted the calls to pullback its bond trading. He might cut more that 5% of salespeople and traders in the business prior to the end of the ongoing quarter.
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