Net income was $2.54 billion vs. a year-earlier loss of $1.93 billion, the New York-based bank said Wednesday in a press release. Earnings per share were $6.04, beating the average analyst estimate of $4.30 in a FactSet survey.
Goldman Sachs has recovered from an abysmal trading performance in 2017 that led some analysts to call for management changes. Blankfein stepped down at the end of September, leaving Solomon in charge.
For the full year, Goldman Sachs' profit more than doubled to $10.5 billion.
Goldman Sachs shares jumped 9.5% to $197.08 at the close of New York trading.
"We are pleased with our performance for the year, achieving stronger top and bottom line results despite a challenging backdrop for our market-making businesses," Solomon said in the press release.
The stock has been under a cloud recently because of an unfolding scandal in Malaysia that has ensnared the Wall Street firm.
Last month, the bank was hit with criminal charges by the government of Malaysia, related to allegations that an investment fund set up to benefit the public was instead used to enrich specific individuals, the New York Times has reported. A Goldman investment banker who did work in Malaysia has pleaded guilty to charges brought by U.S. prosecutors, according to the newspaper.
The fund, 1Malaysia Development Berhad, known as 1MDB, became a source of corruption for people close to a former Malaysian prime minister, Najib Razak, according to the newspaper. Goldman Sachs raised $6.5 billion from investors for the fund in 2012 and 2013, according to the New York Times.
The Malaysian government is seeking $7.5 billion in compensation from Goldman Sachs, the New York Times reported this week.
On a conference call on Wednesday, Goldman Sachs CEO Solomon said that the firm was cooperating fully with the investigations, which remain ongoing.
Because of the involvement of a Goldman Sachs employee, "We apologize to the Malaysian people," Solomon said.
He said that a Goldman Sachs investment banker who was allegedly involved in the matter "purposely concealed" the scheme from the firm.
"Considerable due diligence was conducted," Solomon said.
Goldman Sachs added $516 million during the quarter to its reserves against potential costs related to litigation and regulatory proceedings. For the full year, the amount was $844 million, quadruple the amount in 2017.
The improvement in the fourth quarter came even amid turbulent markets that hurt bond-trading profits across Wall Street.
Goldman Sachs said net revenue in its juggernaut fixed income division, which includes bond-trading as well as foreign exchange and commodities, fell by 18% from a year earlier to $822 million. The deterioration stemmed from lower revenue in corporate-bond trading and government bonds.
The division "operated in an environment characterized by challenging market conditions," the Wall Street firm said in a press release.
Net revenue in the equities division, which includes stock trading, rose 17% to $1.6 billion, "reflecting higher market volumes."
"During the quarter, equities operated in an environment generally characterized by higher volatility," Goldman Sachs said.
Revenue in the investment-banking division slid by 5% to $2.04 billion, due to "significantly" worse results in stock- and bond-underwriting.