Goldman Sachs posted earnings Wednesday that easily topped market expectations on both the top and bottom lines. Shares were volatile on the news, with early losses erased as the stock moved slightly higher in premarket trading.
The Wall Street giant said it earned $5.08 a share on revenue of $8.17 billion, with $2.15 billion in net income representing a near-quadrupling in profit. Goldman was expected to post earnings of $4.82 a share on revenue of $7.742 billion, according to analysts surveyed by Reuters. Return on equity was 11.4 percent compared to a 10 percent benchmark for cost of capital.
A jump in trading revenue helped spur the growth, with revenue from bond-related trading soaring 78.3 percent from a year ago to $2 billion. The bank attributed the gain to a fourth-quarter environment "generally characterized by improved market conditions, including rising interest rates and tighter credit spreads." The news came a day after Morgan Stanley said its trading revenue spiked 173 percent.
The bank said its operating expenses were the lowest since 2008, a key metric that investors are watching. Goldman ended the year with 34,400 workers, a 6.5 percent reduction from the previous year's total of 36,800. Non-compensation expenses tumbled 44 percent in the quarter to $2.33 billion, the company said.
"After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved," chairman and CEO Lloyd C. Blankfein said in a statement. "We continued to manage our expenses carefully and we enter the new year with industry leading positions across our businesses, as well as strong capital and liquidity."