Goldman Sachs
The bank's positiver financial results were overshadowed last Wednesday by about 13% of its profits being wiped out by legal fees to account for the scandal. The ensuing fine amounts to around $2 billion, in addition to the $1.1 billion already paid by the bank late last year.
Goldman's full-year earnings fell by $3.16 per share from the provision. What is worse is that the legal reserves strained Goldman's return on equity and reduced its shareholder value to 10% for the year, the worst among big banks that have reported financial results so far.
"Strong performance in the fourth quarter helped us to deliver solid results for the year, while continuing to invest in new businesses," CEO David Solomon said in a press release. "We aim to drive higher returns in the future, and look forward to sharing our strategic goals and financial targets at Investor Day later this month."
Among other drawbacks were the fact that the advancement of new initiatives in the consumer banking and wealth management departments caused costs to rise as well. This is because Solomon is attempting to launch a huge technology shift that will decrease the amount of trading, in order to reduce volatility.
In other segments, Goldman's global markets division, its biggest business, posted a 33% increase in revenue to $3.48 billion on the back of bond trading revenue increasing by 63% to $1.77 billion, exceeding the $1.16 billion estimate by more than $500 million. Stock trading rose by 12% to $1.71 billion. Investment banking revenue decreased by 6% to $2.06 billion because of a dip in advisory and corporate lending fees as merger activity slowed in the last three months of 2019. The firm's new consumer and wealth management division saw its revenue rising by 8% to $1.41 billion due to increased assets under management and deposits. There was a 51% increase in credit loss provisions to $336 million as retail loans went bad.
