Goldman Sachs blows away analyst expectations on strong fixed-income trading (GS)

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January 18, 2017 3:19 PM

Goldman Sachs just reported fourth-quarter earnings that beat on the top and bottom lines.

Goldman Sachs CEO Lloyd Blankfein.

The firm reported earnings per share of $5.08 on revenue of $8.17 billion for the quarter.

Analysts were expecting adjusted earnings per share of $4.80 on revenue of $7.76 billion, according to Bloomberg. It was initially unclear whether the earnings Goldman reported were adjusted.

Full-year earnings per share for 2016 were $16.29.

The beat was driven by a big performance in the fixed income, currencies and commoditions division. Revenues in that business were up 78% from the previous year.

"Higher than expected revenues in FICC, I&L (equity gains) and Investment Management (incentive fees) more than offset lower than anticipated revenues in equity trading and investment banking (DCM better than expected, M&A and ECM worse)," Barclays analyst Jason M. Goldberg said in a note.

Total trading revenues beat expectations, coming in at $3.60 billion ($3.45 billion expected). That's up 25% from the prior-year quarter but down 4% from the third quarter of 2016.

That reflected higher revenues across all major businesses, the firm said, especially in credit products and interest rate products. It was also thanks to improved market conditions, the firm said, "including rising interest rates and tighter credit spreads."
Securities services revenues were lower because of lower average customer balances, the firm said, while commissions and fees were slightly lower as well. The firm said it had higher revenues in derivatives.
"Although global equity prices generally increased during the quarter, Equities operated in an environment characterized by continued low client activity levels," the firm said.

Investment banking revenues came in at $1.49 billion ($1.47 billion expected). That's down 4% from the year-ago quarter and 3% lower than the third quarter.

In the third quarter, Goldman Sachs had a big beat, reporting diluted EPS of $4.88 ($3.88 expected) on revenue of $8.17 billion ($7.41 billion expected).

Bank of America JPMorgan Wells Fargo,

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