Goldman Sachs profits top forecasts as legal costs rise

Goldman Sachs profits top forecasts as legal costs rise

The shares jumped the most in nearly seven years.

Bank of America shares jumped 7.2 percent, leading the S&P 500 higher, after the bank reported a higher-than-expected quarterly profit on growth in its loan book. The bank's revenue was largely impacted by a slump in fixed-income trading, with those results declining 16% on a year-over-year basis.

Chief Executive Officer David Solomon, who took over in October after having led the banking division, will try to build on the deal-making group's success as he attempts to reshape other business lines and carries out an exhaustive review of the firm's operations.

Shares rose more than 3 percent in premarket trading. The intraday gain was the biggest since March 2012.

Goldman Sachs Group, JPMorgan Chase & Co. and their peers have already reported this week more than $111 billion of profit for 2018.

The bank has been ensnared into the corruption and money laundering scandal surrounding Malaysian state-backed fund 1MDB.

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"It's very clear that the people of Malaysia were defrauded by many individuals, including the highest members of the prior government."
The shares posted their biggest one-day percentage gain in 6-1/2 years.

By segment, Investment Banking revenue was 5 percent lower year-over-year at $2.04 billion, Institutional Client Services revenue rose 2 percent to $2.43 billion, Investing & Lending revenue fell 2 percent to $1.91 billion, Investment Management revenue rose 2 percent to $1.7 billion while provision for credit losses was $222 million compared to $290 million last year. Goldman earned $1.2 billion from its advisory unit. JPMorgan finished higher, gaining 74 cents to $101.68, while Wells Fargo fell 75 cents to $47.67. That compares with consensus estimates of $5.61 in EPS and revenue of $7.78 billion, as well as the $5.68 per share and $7.83 billion posted in the same period of past year. The impressive numbers and upbeat commentary from bank leaders may quell fears that rate hikes and trade wars risk bringing an end to good times for the biggest lenders.

The year-ago results included a one-off charge related to a change in US tax laws.

Goldman's net earnings attributable to common shareholders reached $2.32 billion (£1.66 billion) or $6.04 per share in the three months ended December 31, compared with a loss of $2.14 billion or $5.51 per share a year earlier.

Earlier this week Citi and JP Morgan posted disappointing results, with the former seeing revenue fall two per cent, as both blamed Wall Street's nightmare end to the year.

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