Net revenues in Goldman’s fixed income, currency and commodities unit continued to tumble in the fourth quarter, falling by 15% to $1.72 billion in 2013 from $2 billion in the fourth quarter of 2012. In total, revenues generated by Goldman’s historically key trading unit fell 13% to $8.65 billion in 2013 from $9.91 billion in 2012.
Still, Goldman managed to beat Wall Street expectations by posting fourth-quarter net income of $2.1 billion, earnings of $4.60 per share, which beat estimates of $4.22 per share. For Goldman’s traders, there was also some hope that its fixed income trading group did manage to generate more revenue in the fall than in the summer, when the unit was hit particularly hard. Goldman Sachs CEO Lloyd Blankfein has made an important strategic bet that Goldman's trading profits can be revived in 2014.
“Our work in advancing our client franchise and in ensuring continued cost discipline has allowed us to provide solid returns even in a somewhat challenging environment,” said Blankfein in a statement. “We believe that we are well positioned to generate solid returns as the economy continues to heal and provide considerable upside for our shareholders as conditions materially improve.”
Goldman Sachs remains a very profitable place, but the increase in its earnings are increasingly coming from cutting back on costs like compensation and repurchasing shares. The investment bank earned $8.04 billion in 2013, or $15.46 per share, compared to $14.13 a share in 2012. Return on equity, a key profitability measure, in 2013 was 11%. But net revenues at Goldman Sachs barely budged, coming in at $34.21 billion in 2013 compared to $34.16 billion in 2012.
In total, Goldman repurchased $6.17 billion of stock in 2013, buying back 39.3 million shares at an average cost per share of $157.11. It repurchased 8.5 million shares during the fourth quarter.
Shares of Goldman Sachs have increased by 27% in the last year and were trading flat in pre-market trading.
