updated 12/12/2006 9:33:28 AM ET 2006-12-12T14:33:28

Goldman Sachs Group Inc., the largest investment bank by market value, said Tuesday that its quarterly profit rose 93 percent on investment gains, banking fees and strong trading results.

Goldman capped off what is expected to be a record year for Wall Street as fiscal fourth-quarter net income increased to $3.15 billion, or $6.59 a share, for the three months ended Nov. 30, from $1.63 billion, or $3.35, in the year-ago period. Net revenue rose 47 percent to $9.41 billion.

The most recent results included $129 million in non-cash expenses related to stock-based compensation. Excluding these costs, earnings doubled to $6.77 a share.

Analysts on average had expected Goldman to report a profit of $6.36 a share for the quarter, according to Reuters Estimates, and $6.00 a share excluding items.

Despite trouncing Wall Street expectations, Goldman’s stock slipped 0.9 percent before the bell, reflecting concern that earnings may have peaked after four consecutive record years.

“Everybody is somewhat jittery about the future growth of this company,” said David Stepherson, a portfolio manager at Baltimore-based Hardesty Capital Management, which owns Goldman shares. “It’s doubtful they will have the type of year they just had.”

Still Stepherson said he expects Goldman to continue surprising analysts with rising profit, despite their average forecast for a decline.

The bank kicked off two weeks of earnings reports from the largest U.S. securities firms, which were expected to rebound from a sluggish third quarter amid robust M&A and leveraged buyout activity, stock and debt offerings and trading.

Investors sent Goldman shares up 59 percent this year, more than four times the 13 percent advance of the benchmark S&P 500 Index

New York-based Goldman once again led the industry in advising on mergers and acquisitions. Investment banking fees rose 42 percent to $1.34 billion, while trading and principal investments income rose 57 percent to $6.63 billion.

Asset management and securities services revenue rose 20 percent to $982 million.

The bank also recorded a $949 million gain from its investment in Industrial and Commercial Bank of China Ltd which went public in the largest IPO ever during the quarter. The bank also recorded $528 million in other investment gains and fees.

Copyright 2012 Thomson Reuters. Click for restrictions.


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