Goldman Sachs reports 4Q loss on big charge for US tax reform
NEW YORK: Goldman Sachs reported a rare quarterly loss yesterday due to a onetime charge associated with US tax reform. Performance across operating division was mixed.
The US investment banking giant reported a fourth-quarter loss of $2.1 billion, compared with a profit of $2.2 billion in the yearago period. The loss, Goldman’s first in a quarter since 2011, was driven by $4.4 billion in one-time charges, mostly due to US tax reform provisions on the repatriation of foreign earnings. The bank warned of the hit in December. The charge also weighed on annual earnings, which fell 48 percent to $3.7 billion. Numerous large companies have made similar announcements of one-time negative effects from US tax reform in recent weeks. Most, including Goldman Sachs, are bullish on the long-term effects of the US tax cuts, arguing they will lead to faster economic growth.
In terms of bank operations, Goldman scored impressive gains in revenues from both debt and equity underwriting. Financial advisory revenues also increased.
On the downside, Goldman’s performance in its trading division, which has struggled in recent quarters amid low volatility, turned in another weak performance. Revenues in this division slumped 34 percent from the yearago period, weighed down especially by a 50 percent plunge from the closely-watched fixed income, commodities and currency trades.“Last year, we delivered higher revenue and stronger pre-tax margins despite a challenging environment for our marketmaking businesses,” said Goldman Sachs chief executive Lloyd Blankfein.
“With the global economy poised to accelerate, new US tax legislation providing tailwinds and a leading franchise across our businesses, we are well positioned to serve our clients and make significant progress on the growth plan we outlined in September.”
Shares of Goldman Sachs fell 0.6 percent in pre-market trading to $256.75.