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Goldman Sachs Q4 Profit More Than Doubles; Results Top Estimates

goldmansachs jan19 lt

Goldman Sachs Group Inc. (GS) on Tuesday reported a fourth-quarter profit that more than doubled from last year, reflecting a surge in investment banking revenues and lower provisions for bad loans. Net revenues for the quarter rose 18 percent. Both quarterly earnings per share and revenues topped analysts' expectations.

The company said it remains committed to its medium- and long-term targets. It is on track to generate $1.3 billion in run-rate expense savings over the medium term. It achieved about half of its medium-term plan in 2020.

Goldman Sachs reported that its net earnings applicable to common shareholders for the fourth quarter of 2020 were $4.36 billion or $12.08 per share, more than double from the prior year's $1.72 billion or $4.69 per share. Analysts polled by Thomson Reuters expected the company to report earnings of $7.47 per share for the fourth-quarter. Analysts' estimates typically exclude special items.

Provision for credit losses was $293 million for the fourth quarter of 2020, 13 percent lower than the fourth quarter of 2019. The latest-quarter result included reserve reductions on wholesale loans reflecting stabilization in the broader economic environment following the impact of the COVID-19 pandemic earlier in the year, partially offset by higher provisions from growth in credit card loans compared to the prior year.

Operating expenses were $5.91 billion for the fourth quarter, 19 percent lower than the fourth quarter of 2019, primarily due to significantly lower net provisions for litigation and regulatory proceedings, lower compensation and benefits expenses. The decreases were partially offset by significantly higher charitable contributions.

Net revenues for the fourth quarter rose 18 percent to $11.74 billion, from the prior year's $9.96 billion, due to higher net revenues across all segments, including significant increases in Global Markets and Investment Banking. Analysts expected revenue of $9.99 billion for the quarter.

Quarterly net revenues in Investment Banking were $2.61 billion, 27 percent higher than last year, reflecting significantly higher net revenues in underwriting and financial advisory, partially offset by a net loss in Corporate lending.

Net revenues in Global Markets were $4.27 billion for the fourth quarter, up 23 percent from the previous year.

Net revenues in Asset Management were $3.21 billion for the fourth quarter, 7 percent higher than the prior year.

Net revenues in Consumer & Wealth Management were $1.65 billion for the fourth quarter of 2020, 17% higher than the fourth quarter of 2019.

In Tuesday pre-market trading, GS was trading at $307.10 up $6.09 or 2.02 percent.

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