Goldman earnings surge to $2.8bn Goldman Sachs reported higher than expected fourth-quarter earnings thanks to buoyant debt markets and improved asset prices which bolstered the value of the bank's investments. Net income in the three months to the end of December almost tripled to $2.83bn compared with the same period last year, Goldman said on Wednesday. That equated to fourth-quarter earnings per share of $5.60 - much higher than the $3.64 forecast by analysts. The figure leaves Goldman with its most profitable quarter since it reported net income of $3.46bn back in the first three months of 2010. The New York-based investment bank has been struggling to prove it can still make money under new regulations, which prohibit banks from trading for their own books and also force them to hold more capital against their activities. Goldman's return on equity - a key gauge of its ability to generate profits for its shareholders - had drifted to as low as 3.66 per cent at the end of last year. Wednesday's better than forecast results give the bank an RoE of 10.7 per cent. "While economic conditions remained challenging for much of last year, the strengths of our business model and client franchise, coupled with our focus on disciplined management, delivered solid performance for our shareholders," said Lloyd Blankfein, chief executive. Revenues in the period jumped 53 per cent to $9.24bn, led by a 63 per cent increase in investment banking and a 109 per cent increase in the bank's market-making activities. In principal transactions, where Goldman makes its own long-term investments, revenues rose about 135 per cent to $1.96bn. While the so-called Volcker rule prohibits banks from making short-term trades for their own accounts, it still allows them to make longer-term investments such as buying property or stakes in various companies. Goldman reported a $334m gain on the value of its investment in ICBC in the fourth quarter, for instance. The bank has also been attempting to trim expenses to deal with more muted trading activity in recent years. The pay and bonuses Goldman gives its bankers fell 11 per cent in the period to $1.98bn. That leaves remuneration as a percentage of the bank's net revenues at about 38 per cent for 2012, compared with 42.4 per cent in 2011. Total expenses rose 3 per cent to $2.95bn in the period. Mr Blankfein warned in November that the financial industry should not go "overboard" cutting costs to make up for lacklustre markets. The investment bank had previously said it planned to cut $1.9bn worth of expenses in 2012. To that end, this year Goldman announced its smallest crop of new partners since going public more than a decade ago and has been cutting positions and outsourcing certain jobs to what it euphemistically calls "high-value locations." Employees in cities such as Bangalore and Salt Lake City now make up about a fifth of Goldman's total headcount, Mr Blankfein said back in November. Shares in the bank were up 2.2 per cent at $2.91 in pre-market trading.