US banking giant Goldman Sachs said Friday the recently-enacted US tax reform will cut its earnings this year by about $5 billion, mainly because of a tax targeting earnings held abroad.

The tax reform package is expected to "result in a reduction of approximately $5 billion in earnings for the fourth quarter," the company said in a statement"Approximately two-thirds of which is due to the repatriation tax."

The one-time hit means a likely loss for the fourth quarter for the banking group when it reports quarterly and annual earnings January 17. Goldman Sachs reported net profits of $2.4 billion in the fourth quarter of 2016, while the annual total last year was $7.4 billion.

US President Donald Trump last week signed into law a sweeping overhaul of the US tax code, in what was his first major legislative victory since taking office nearly a year ago.

The measure is expected to boost corporate profits of banks and other companies over the medium and long term by lowering the corporate tax rate to 21 percent from 35 percent.

However, several large corporations have signaled that the law will result in a short-term hit on earnings repatriated from overseas. The reform taxes these earnings at 15.5 percent on cash and equivalents and eight percent on real estate and other illiquid assets.

Other large companies that have alluded to large one-time hits in the fourth quarter include Credit Suisse, Barclays and Royal Dutch Shell.

Despite the impact of the repatriation tax, large companies have strongly backed the tax reform, arguing it will boost growth in the long term.

Analysts are generally upbeat about the earnings prospects of large banks heading into 2018 in the wake of US tax reform, as well as the Trump administration's moves to streamline bank regulations, higher Federal Reserve interest rates and solid economic growth.

A note from CFRA Research earlier this month gave a "positive" outlook on diversified banks, saying "the success of the banks passing the 2017 Federal Reserve stress tests opens the door for improved shareholder return through dividend increases and share repurchases."

Shares of Goldman Sachs dipped 0.8 percent to $254.41 in early trading Friday, the last trading day of the year