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Published: Thu, January 19, 2017
World | By Tasha Manning

Goldman Had a Blowout Quarter As Donald Trump Poached Its Staff

Goldman Had a Blowout Quarter As Donald Trump Poached Its Staff

This is compared to analyst expectations of $4.82 earnings per share on $7.72 billion in revenues.

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.

Like other Wall Street banks, Goldman benefited from jumps in volume across fixed-income markets late in the quarter after Donald Trump won the US presidential election and the Federal Reserve raised its key interest rate target.

For the year overall, however, the numbers are not as positive.

"After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved", said CEO Lloyd Blankfein in a statement.

However, Goldman's shares were down 1.4 percent to $232.21 in late morning trading. However, the firm's revenues missed forecasts, declining 9pc to just over $17bn, as a series of asset sales took their toll.

Investment banking revenue, which includes income from advising on mergers and acquisitions as well as underwriting bond and share offerings, fell 3.9% to $1.49bn.

Goldman, unlike other large banks, doesn't break out the profits of individual business units until it files its formal quarterly report with the Securities and Exchange Commission, typically a few weeks after its announcement.

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It's notable that the two banks that led the way in job cuts were Goldman and Citigroup Inc., which separately on Wednesday delivered fourth-quarter profit that also topped analysts' projections.

With interest rates now marching higher and corporations on their front foot 2017 augurs well for Goldman. FICC revenue surged 78% to $2 billion, however, beating the consensus of $1.49 billion.

Goldman has also been trying to cut costs, having launched a program past year to slash $700 million from annual expenses.

In 2016, Goldman and Citigroup shed the most employees, while JPMorgan and Wells Fargo did the opposite.

And Gary Cohn, Goldman's chief operating officer and a person widely thought to be a potential successor to Blankfein, is about to leave Goldman to become Trump's chair of White House National Economic Council.

Non-compensation expenses were $2.33 billion for the fourth quarter of 2016, 44% lower than the fourth quarter of 2015.

The strong performance in trading helped lift the firm's return on common equity, a metric used by investment banks to measure how well they did based on how much capital they have, to 11.4 percent in the quarter.

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