Goldman Sachs said its fourth-quarter profits dropped by 24 per cent from a year earlier, as the bank had to set aside money to cover its looming settlement with US authorities over its role in a Malaysian sovereign wealth fund scandal.
The investment bank said Wednesday that it earned a profit of USD 1.72 billion in the quarter, or USD 4.69 a share, down from a profit of USD 2.32 billion, or USD 6.11 per share, a year earlier.
The results missed analysts' expectations for earnings of USD 5.47 a share.
Despite having a strong quarter in trading, Goldman's results were marred by significantly higher expenses. The bank set aside roughly USD 500 million more to cover its legal expenses in the quarter.
The bank is currently negotiating a settlement over its involvement in 1MDB, a Malaysian government-sponsored investment fund that became a conduit for high-level Malaysian officials to launder money out of the country.
Malaysia's prime minister was arrested as part of the scandal, and another official is a fugitive and his whereabouts are unknown.
Also Read
Two former Goldman Sachs bankers have been charged for their role in helping 1MDB launder money.
The bank also had a big jump in its compensation expenses, setting aside USD 3.05 billion in the quarter to pay its well-compensated employees, compared with $1.86 billion a year earlier.
Many of Goldman's employees earn the bulk of their pay in large year-end bonuses. For the full-year, however, compensation and benefits costs at the bank were basically flat - reflecting the difficult year Goldman had in many of its businesses.
The expenses overshadowed what was a pretty decent quarter for Goldman, reflecting financial markets' overall performance in the last three months of the year.
Trading revenues were up 33 per cent from a year earlier, lead by a massive jump in revenue from trading bonds, commodities and currencies.
For the full year, Goldman had a profit of USD 7.9 billion, down from USD 9.86 billion in the same period a year ago.
Disclaimer: No Business Standard Journalist was involved in creation of this content