Goldman Sachs profits top forecasts as legal costs rise

(Bloomberg pic)

NEW YORK: Goldman Sachs posted better-than-expected quarterly profits despite higher legal and regulatory expenses, the company reported Wednesday.

The investment bank notched fourth-quarter profits of US$2.3 billion, after posting a US$2.1 billion in the same period of the prior year due to one-time costs associated with US tax reform.

Revenues were about flat compared to a year earlier at US$8.1 billion.

Goldman increased the funds it set aside for litigation and regulatory proceedings to US$516 million from US$9 million in the year-ago period.

The investment bank has been embroiled in a scandal involving Malaysian fund 1MDB that is the subject of numerous government probes, but the company’s press release did not say what the funds were earmarked for.

Chief Executive David Solomon is due to provide an update on 1MDB during a conference call later Wednesday, according to Goldman’s presentation.

Goldman joined other large banks in reporting a drop in US Treasury trading amid heavy volatility at the end of 2018. But the overall trading division still notched a modest revenue gain because of higher equity trading.

The firm also notched higher revenues in financial advisory services, but lower sales in debt and equity underwriting.

“We are pleased with our performance for the year, achieving stronger top and bottom line results despite a challenging backdrop for our market-making businesses in the second half,” Solomon said.

Shares rose 2.7% to US$184.78 in pre-market trading.