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Goldman Profit Rises on Deal Activity



Goldman Sachs Group
Inc.'s


GS 5.44%

Fourth-quarter earnings exceeded Wall Street expectations as their merger bankers rescued the bond traders, who continue to struggle hard.

Goldman's $ 2.54 billion or $ 6.04 per share gain was higher than a year ago and well above the $ 1.64 billion, or $ 4.27 per share, of analysts interviewed by Refinitv were predicted.

Quarterly revenue was $ 8.1 billion. The shares increased by 3.5%.

It's the first quarter of results for David Solomon, who took over Goldman's chairmanship on October 1

. He will speak to analysts on Wednesday morning in a conference call. This is a task of his predecessor Lloyd Blankfein, left to the lieutenants.

He is expected to defend Goldman against the allegation he made fraud on a Malaysian investment fund.

Malaysia filed a lawsuit against Goldman. The bank claims it will fight. US prosecutors are investigating Goldman's role and may face charges, in addition to a fine that analysts predict could cost as much as $ 2 billion. This would be equivalent to a quarter of Goldman's expected 2019 earnings and would bring in money that could be used for new projects such as consumer banking, commercial payments, and trade technology upgrades.

Fourth quarter results were led by Goldman's merger bankers with $ 1.2 billion in sales. The bank earned Andeavor $ 45 million in the acquisition

Marathon Petroleum

A deal that was completed in the quarter.

Revenues from underwriting equities, bonds and other securities declined 38% year-on-year as troubled markets forced executives to discontinue deals.

Goldman's dealers continued to struggle as the bumpy markets caught the Wall Street desks unprepared. For fixed income securities, which trade bonds, commodities, currencies and other products, sales were down 18% year-on-year, their lowest level since 2008 – steeper than the quarterly decline this week

JPMorgan Chase

& Co. and

Citigroup
Inc.

After years of weak trading revenues attributed to quiet markets and low interest rates, banks did not find recent volatility and interest rate hikes more favorable.

Price movements offer at least on paper a chance for traders to capitalize. When the swings get too wild, nerves are broken and banks tend to retreat. Large Wall Street companies also had an incentive to downsize their trading books by the end of the year, when regulators determine how much capital they need to raise for the coming year.

Goldman's asset management division, which manages funds for institutional investors and wealthy individuals, posted record revenues of $ 1.7 billion. Dwarfs of giants like

BlackRock
Inc.

Focusing on Vanguard Group or the Vanguard Group, the company has focused on high-touch service for large pension funds and governments, but also offers a small selection of passive funds with low fees.

Assets Under Oversight – one measure, Goldman Brand Fund investments and customers' money driving the company's rival products was $ 1.5 trillion.

Write to Liz Hoffman at liz.hoffman@wsj.com


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