The investment bank reported profits of $1.7 billion for the quarter ending December 31, a 25.8 percent drop compared with the year-ago period.
Revenues rose 25.4 percent to $9.0 billon, but operating expenses jumped 41.7 percent to $7.3 billion.
Goldman Sachs has been in talks with US prosecutors to settle a criminal probe into 1MDB, a scandal-plagued Malaysian investment fund for which the US bank worked.
In addition to higher legal costs, Goldman spent more on compensation and benefits and technology.
Goldman suffered a drop in financial advisory revenues due to a "significant" decrease in mergers and acquisitions.
However, Goldman's other major divisions saw higher revenues.
These included asset management, which was boosted by big gains in public equities during the quarter, as well as global markets, which benefited from increased trading of financial products linked to interest rates and commodities.
Goldman Sachs Chief Executive David Solomon credited the bank with a "strong" performance in the fourth quarter. He has scheduled an investor day for later this month, part of an effort to boost Goldman's share price, which has lagged JPMorgan Chase and some other leading banks.
"We aim to drive higher returns in the future and look forward to sharing our strategic goals and financial targets at investor day later this month," Solomon said.
Shares fell 0.7 percent to $244 in pre-market trading.
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