If you ignore a bunch of stuff, Goldman Sachs had a great quarter

Lloyd BlankfeinGoldman SachsGoldman Sachs CEO Lloyd Blankfein.

Goldman Sachs on Wednesday reported fourth-quarter earnings that were a beat if you exclude a big one-off settlement.

The firm reported diluted earnings per share of $1.27 on revenue of $7.27 billion.

It paid a settlement related to mortgage-backed securities sold between 2005 and 2007 that reduced diluted earnings by $3.41 per share. Adjusted earnings per share, then, were $4.68.

Analysts were expecting adjusted earnings per share of $3.62 on revenue of $7.11 billion, according to Bloomberg.

“We are pleased that our diversified business mix allowed us to deliver solid results in a year characterised by uneven global economic activity,” CEO Lloyd Blankfein said in a statement.

“Looking ahead, we believe our strong global client franchise leaves us well positioned to generate superior returns over the long term.”

For the full year, diluted earnings per share came in at $12.14, down from $17.07 for 2014. The mortgage-backed-securities settlement reduced full-year diluted earnings per share by $6.53, the firm said.

In the fourth quarter, the firm beat on total trading, equities trading, and investment banking, and it missed in the fixed income, currency, and commodities trading division.

Here’s the breakdown for the quarter by division:

  • Institutional Client Services, or total trading, revenue came in at $2.88 billion ($2.87 billion expected), down 9% year-on-year and down 10% quarter-on-quarter.
  • Fixed income, currency, and commodities revenues were $1.12 billion ($1.19 billion expected), 8% lower than the same quarter a year ago, which the firm attributed to “significantly lower net revenues in commodities” and lower mortgages and currencies revenues.
  • Equities revenue came in at $1.76 billion ($1.68 billion expected), down 9% year-on-year. The firm said that reflected “significantly lower net revenues in equities client execution, due to significantly lower net revenues in cash products and lower net revenues in derivatives.”
  • Investment-banking revenues were $1.55 billion ($1.42 billion expected), up 7% year-on-year and in line with the previous quarter. Financial advisory revenues were up 27% year-on-year, thanks to increased activity in the US, while underwriting revenues were down 11%.
  • Investing and Lending revenue came in at $1.30 billion for the fourth quarter, down 15% from the same quarter last year but up 93% from a disastrous third quarter.
  • Investment management revenues were $1.55 billion, in line with the year-ago quarter and up 9% quarter-on-quarter.

In the same quarter last year, Goldman beat expectations, reporting adjusted earnings per share of $4.38 ($4.32 expected) on revenue of $7.69 billion ($7.64 billion expected).

The bank missed in the
third quarter, reporting adjusted earnings per share of $2.64 ($3.00 expected) on revenue of $6.86 billion ($7.12 billion expected).

JPMorgan, Citigroup, Wells Fargo, Bank of America, and Morgan Stanley have already reported fourth-quarter earnings, and all of them beat expectations.

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