Goldman Sachs Group said profit almost tripled as gains in the value of the firm's own investments contributed to the first year of revenue growth since 2009.
Fourth-quarter net income surged to $2.89 billion from $1.01 billion a year earlier, according to a statement today from the New York-based firm. Earnings for common shareholders, which includes the cost of preferred stock dividends, rose to $2.83 billion, or $5.60 a share, from $978 million, or $1.84. The average estimate of 26 analysts surveyed by Bloomberg was for $3.66 a share, with predictions ranging from $2.56 to $4.80.
Chief Executive Officer Lloyd C. Blankfein, 58, has undertaken a $1.9 billion expense-reduction effort since mid- 2011 and said he expected earnings growth to resume when the economy and markets improved. A stock-market rebound and a $500 million profit from selling a hedge fund-administration unit helped revenue recover from the lowest first half since 2005.
"The big question is how do they continue to transition away from being a trading business to other ways of making money," Benjamin B. Wallace, an analyst at Westborough, Massachusetts-based Grimes & Co., which oversees $1.1 billion, said before results were released. "How much of their own capital are they going to continue to be investing going forward?"
JPMorgan Chase & Co., the biggest U.S. bank by assets, reported earlier today that 2012 was its third straight year of record profit. Bank of America Corp., the second-largest lender, and No. 3 Citigroup Inc. are set to release results tomorrow. Morgan Stanley, the sixth-biggest bank, is due on Jan. 18.
Goldman Sachs has gained 6.3 percent this year, closing yesterday at $135.59, after advancing 41 percent in 2012. The company raised its dividend twice last year, increasing the quarterly payout to 50 cents a share from 35 cents.