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Goldman Sachs Group Inc.'s (GS) fourth-quarter profit fell 52% as revenue fell more than analysts expected.

Results in Goldman's two biggest businesses, investment banking and trading, fell across the board. Investment banking revenues fell 10%, and trading and securities services revenues were down 31%. Goldman also said its investment banking backlog decreased from the third quarter. Trading in fixed income, currencies and commodities, long one of Goldman's most lucrative operations, fell 48% from the same period in 2009. Goldman blamed lower client activity.

Investment management was a bright spot, where revenues rose 14% from the fourth quarter of 2009. A new category created to separate Goldman's proprietary investing and lending businesses showed a 45% increase in revenues.

In response to regulatory investigations that have tarnished its once sterling public image, Goldman is adjusting its financial reporting to make its results easier to understand. Market making, the business in which Goldman trades on behalf of clients, fell 43% in the fourth quarter compared to 2009, while revenues from principal transactions rose 50% in the same timeframe.

For the full year, net revenues fell 13%, to $39 billion.

Expenses not related to compensation rose 11%. Goldman wrote off $305 million from the value of its NYSE Euronext floor trading operations, nearly wiping out its investment in the business a decade after acquiring Speer Leeds & Kellogg. It also set aside a net $19 million for litigation and regulatory proceedings.

Goldman has had to deal with persistent scrutiny of its dealings, most recently its controversial private placement for Facebook. On Monday, just weeks after tantalizing private clients with the chance to get in on a $1.5 billion private investment in one of the hottest technology companies in years, Goldman told U.S. clients it wouldn't allow them in on the offering, which raised potential regulatory and legal issues.

Goldman Sachs set aside less in annual compensation to reward its 35,700 employees. The firm's compensation expense was $15.4 billion, down from $16.2 billion, a year ago. On a per employee basis, compensation was $430,700, down 13.6% from $498,246, a year earlier.

Shares dropped 2.6% to $170.15. The stock has gained 2.1% over the past year.

"Looking ahead, we are seeing signs of growth and more economic activity and we are well-positioned to help our clients expand their businesses, manage their risks and invest in the future," Chief Executive Lloyd C. Blankfein said.

Goldman posted a profit of $2.39 billion, down from $4.95 billion a year earlier. On a per-share basis, which includes preferred dividends, it dropped to $3.79 from $8.20. Net revenue dropped 10% to $8.64 billion.

Analysts polled by Thomson Reuters most recently forecast earnings of $3.76 a share on $9 billion in revenue.

(Matt Jarzemsky and Brett Philbin contributed to this report)

-By Liz Moyer, Dow Jones Newswires; 212-416-2512; liz.moyer@dowjones.com

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