Goldman Sachs more than doubled profits in the final three months of 2020 as a trading and investment banking bonanza catapulted revenues to record fourth-quarter levels.
The Wall Street investment bank posted net income of $4.5bn for the quarter, up 135 per cent year-on-year, as revenue rose 18 per cent to $11.7bn, the highest ever for a fourth quarter.
Earnings per share, at $12.08, was well above the $7.058 expected by analysts in a Bloomberg poll.
Return on equity for the quarter was 22.5 per cent, far better than the medium term target of 14 per cent Goldman promised under a strategic plan laid out a year ago and reaffirmed on Tuesday.
Comparisons with 2019 are flattered by the sharp fall in litigation charges, which took a $1bn chunk out of fourth-quarter earnings a year ago, as the bank set aside money to deal with the 1MDB money laundering and bribery scandal.
Equities trading was the biggest contributor to the fourth quarter’s improved performance, with revenues rising 40 per cent versus a year earlier to almost $2.4bn. The figures lagged behind the 57 per cent rise reported by rival Citigroup but beat the 32 per cent increase at JPMorgan Chase.
Goldman’s fixed income trading revenues rose 6 per cent year-on-year, to $1.9bn, while in investment banking they rose 27 per cent to $2.6bn, including a near trebling of revenues from helping companies to raise equity.
Goldman reaffirmed its strategic plan, which pivots the group away from its trading and investment banking roots towards areas such as cash management and digital consumer banking. It added it had delivered around half the $1.3bn cost savings promised over three years.
Revenues in consumer banking rose 17 per cent year on year, to $1.6bn, as it expanded its loan book to $8bn and deposits to $97bn.
Goldman Sachs shares were up 3 per cent in pre-market trading, to $310.