Belfast Telegraph

US banking giant Goldman Sachs reports bumper fourth quarter, helped by Trump

US investment banking giant Goldman Sachs has delivered a bumper fourth quarter, helped by a drop in litigation costs and a market rebound following the election of Donald Trump.

The group reported 2.35 billion US dollars (£1.91 billion) in net earnings for the three months to December 31, up from 765 million US dollars (£620 million) a year earlier, while revenues rose to 8.17 billion US dollars (£6.63 billion) from 7.27 billion US dollars (£5.9 billion) over the same period.

The company said that "improved market conditions, including rising interest rates and tighter credit spreads" during the final months of 2016 helped drive a 78% jump in client revenues from fixed income, currency and commodity trading to two billion US dollars (£1.6 billion).

Events including the election of Donald Trump in November led to a jump in market activity to year-end, with US bonds, stocks and the dollar rallying in the wake of the vote.

Meanwhile, a November agreement by the Opec cartel to cut oil supply drove crude prices higher.

Chairman and chief executive Lloyd Blankfein said: "After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved.

"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."

Earnings were boosted by a drop in costs compared to last year, when Goldman Sachs reached a multibillion dollar legal settlement with the Department of Justice over the mishandling of mortgage-backed securities.

The fall in litigation costs meant net earnings rose from six billion US dollars (£4.9 billion) to 7.4 billion US dollars (£6 billion) in 2016, despite a drop in full-year net revenues from 33.8 billion US dollars (£27.4 billion) to 30.6 billion US dollars (£24.8 billion)

Cost-cutting measures - including a 7% reduction in its global workforce - also helped full-year operating expenses drop to their lowest level since 2008 at 20.3 billion US dollars (£16.5 billion).

Employees will share out a 11.65 billion US dollar (£9.4 billion) pay and bonus pot, down 8% from 2015, "reflecting a decrease in net revenues and the impact from expense savings initiatives", Goldman Sachs said.

Operating expenses for the fourth quarter dropped to 4.8 billion US dollars (£3.9 billion) from 6.2 billion (£5 billion) a year earlier.

Goldman Sachs boss Mr Blankfein is reportedly among a handful of Wall Street bosses set to meet Prime Minister Theresa May on Thursday in Davos, where leaders are gathering for the World Economic Forum's annual meeting in Switzerland.

There will also be private meetings with the chief executives of other major US banks including JP Morgan, Morgan Stanley and asset manager BlackRock, according to Sky News.

It comes after Mrs May confirmed Britain would not hold on to membership of the European Union's single market, which could raise barriers to trade in financial services.

Goldman Sachs has around around 6,500 staff in the UK.