Lower revenues led to a year-over-year increase in Goldman Sachs Group Inc.'s compensation ratio for 2016.

Goldman saw its ratio of compensation and benefits to net revenues increase to 38.1% in 2016, compared with 37.5% in 2015. During an earnings conference call, President, co-COO and CFO Harvey Schwartz said that compensation expense was down 8% year over year in 2016, but revenue dropped 9% over the same period.

"Obviously that translates into a small uptick in the compensation ratio," Schwartz said.

Total revenues at Goldman were $30.61 billion in 2016, down from $33.82 billion in 2015. The company saw its net revenues in equities client execution drop 28% year over year to $2.19 billion in 2016. In the fourth quarter of that year, equities client execution was down 18% year over year to $459 million.

Schwartz said market-making revenues are often volatile because a small number of transactions could have a significant impact on results. That is what happened during the 2016 fourth quarter, according to Schwartz.

"It wasn't the greatest quarter," he said.

Goldman Sachs did see better fourth-quarter 2016 results with its fixed income, currency and commodities client execution, which was up 78% year over year to $2.00 billion. Schwartz said the increase was in part a reflection of improvements in the global economic outlook. He said Goldman is optimistic about fixed-income activity going forward if rates continue to rise while expectations of growth replace concerns about deflation and economic decline.

"I think there's meaningful upside in terms of the activity levels we could see in fixed income," he said.

Improvements in client sentiment could help drive revenue in other parts of Goldman's business as well, and that could lead to a lower compensation ratio, Schwartz said.

"If we see a big uptick in revenues, certainly you should see a decline in the compensation ratio," he said.