Goldman Profit Jumps on Banking, M&A
Driven by strong investment banking, equity offerings and debt underwriting results, investment banking giant Goldman Sachs reported quarterly earnings and revenues on Wednesday that far exceeded Wall Street's expectations.
Earnings excluding items jumped to $5.60 per share from $1.84 a share in the year-earlier period, with net revenues improving to $9.24 billion from $6.05 billion a year ago. The bank saw net earnings of $2.89 billion in the quarter, with an annualized return on equity of 16.5 percent
Wall Street had expected Goldman Sachs to report earnings excluding items of $3.78 a share on $7.91 billion in revenue, according to a consensus estimate from Thomson Reuters.
Goldman is the second bank to report better than expected earnings results in spite of the widespread uncertainty that dogged the global economy last year. Earlier, JPMorgan Chase also beat analysts' estimates amid a trading scandal that cost the bank $6.2 billion.
According to Goldman, its debt underwriting operation generated $1.96 billion in revenues, its second-best annual performance and the highest in more than five years. It also boasted of maintaining its top ranking in mergers and acquisitions during the year. Fourth quarter investment banking revenues surged 64 percent versus a year ago, while the bank's underwriting business doubled its quarterly intake.
Despite what he called a "challenging" economy, Goldman chairman and CEO Lloyd C. Blankfein said in a statement that his bank's "strategic position provides a solid basis on which to grow and generate superior returns."
The investment bank's shares surged more than three percent before the opening bell, following the news. Goldman's stock has been rising on the optimism of a recovering economy, investor inflows into stocks, and expectations that the investment bank is well positioned for a wave of mergers and acquisitions.
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