With a loss of US$1.9 billion in the final quarter of 2017, Goldman Sachs Group Inc. [NYSE: GS] has reported their first quarterly loss since 2011.
Included in the loss, is a US$4.4 billion tax as stated by the new tax law passed in the US last December. This tax charge is for foreign earnings which are now taxable as declared by law and deferred stock assets the company accumulated after the recent financial crisis.
Fourth quarter revenue decreased by a whopping 50% to US$1 billion, when compared to the same period for the previous year.
Overall revenue for the entire 2017 fell by 4.34% from US8.71 billion to US$7.83 billion. Goldman Sachs revenue stream was affected by fixed income, currencies and commodities trading. The fixed income desk lost money on oil and gas trades as well as corporate debts.
The trading operations of the company, when compared to the same period in 2016, fell by 34% to US$2.37 billion. Even though the majority of the major banks on the market such as Wells Fargo and Citigroup have reported declines in revenue for the fourth quarter of 2017, Goldman Sachs Group has published the steepest drop.
On a positive note, however, the Investment Banking Division, which deals with bond sales, mergers and underwriting stocks, reported a net revenue increase of 44% to US$2.14 billion.
Not to be outdone, the company’s Asset Management Division experienced a 4% increase in revenue of US$1.66 billion when compared to a year ago. Current assets under management is clocked at US$1.49 trillion.
Despite the underperformance in the industry for the past six months, Goldman Sachs Group’s have surpassed estimates. We believe the company’s well-diversified business and its focus to capitalise on growth opportunities through strategic moves should continue to bolster the overall business.
Additionally, steady capital deployment activities have boosted investors’ confidence.
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