Goldman Sachs IM Sees Net Revenues Sink 7 Per Cent YOY; AuM Hit Record High

Josh O'Neill

19 January 2017

Goldman Sachs' investment management arm saw its net revenues dip 7 per cent year-on-year to $5.8 billion in 2016 while assets under supervision swelled 10 per cent to a record $1.4 trillion during the year.

The decline in net revenues primarily reflected significantly lower incentive fees compared with a strong 2015, the New York-headquartered bank said in its full year earnings statement, adding that management and other fees were also cut as a result of “shifts in the mix of client assets and strategies”.

Despite a deflation in net revenues, total assets under supervision increased $127 billion and long-term assets under supervision rose $75 billion, including net inflows of $42 billion, mainly in fixed income assets, and net market appreciation of $33 billion, predominantly in equity and fixed income assets.

Liquidity products grew $52 billion in 2016 and operating expenses weighed in at $20 billion, 19 per cent lower than 2015. The group's total operating expenses were at the lowest level since 2008.

In the fourth quarter of 2016, net revenues in investment management were $1.6 billion, 3 per cent higher than in the same period of the previous year. This rise was propelled by higher incentive fees and transaction revenues, Goldman Sachs said.

The group as a whole reported net revenues of $30.6 billion and net earnings of $7.4 billion for 2016.

“After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved,” said Lloyd Blankfein, chairman and chief executive, adding: “We continued to manage our expenses carefully and we enter the new year with industry leading positions across our businesses, as well as strong capital and liquidity.”