Goldman Sachs beat estimates for fourth-quarter profit on Tuesday as its equity traders capitalized on a market restoration and income from asset and wealth administration rose, offsetting weaker funding banking.
Stock markets have rallied as economists and buyers develop extra assured the US will keep away from a recession. Market contributors are additionally debating when the Federal Reserve will lower rates of interest, which may act as one other catalyst for exercise.
“This was a year of execution for Goldman Sachs,” CEO David Solomon mentioned in a press release. “With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024.”
The financial institution’s shares climbed 1.3% in buying and selling earlier than the bell. They have been up 12.3% final yr, in contrast with beneficial properties of 27% for JPMorgan Chase and 10% for Morgan Stanley.
Goldman’s equity buying and selling income jumped 26% within the fourth quarter, whereas its income from asset and wealth administration rose 23% to $4.39 billion.
The unit additionally booked a acquire of $349 million from a deal to promote a part of its wealth enterprise to an impartial wealth supervisor.
Investment banking charges fell 12% to $1.65 billion, as a decline in mergers and acquisitions (M&A) offset beneficial properties from debt and inventory gross sales.
Revenue from fastened earnings, currencies and commodities (FICC) buying and selling fell 24% as weak point in rate of interest merchandise and currencies dragged down beneficial properties from mortgage merchandise.
The financial institution’s profit was $2.01 billion, or $5.48 per share, for the newest quarter, in contrast with $1.33 billion, or $3.32 per share, a yr earlier.
Analysts on common anticipated a profit of $3.51 per share, in accordance with LSEG information.
Headcount
Goldman had a headcount of 45,300 on the finish of December, 1% lower than within the third quarter and practically 7% decrease than within the year-earlier interval.
The financial institution laid off 1000’s of workers in 2023, together with cuts to its workforce in January that have been the most important because the 2008 monetary disaster.
Goldman is among the many banking giants that can pay a particular evaluation price to refill a authorities deposit insurance coverage fund (DIF) that was drained of $16 billion by the collapse of two regional banks final yr.
It acknowledged a $529 million expense tied to the price within the fourth quarter.
Platform options increase
Goldman’s platform options unit, which homes a few of its shopper operations, reported a 12% soar in income to $577 million.
The soar was pushed by greater common bank card balances, which cushioned the hit from markdowns associated to the portfolio of GreenSky loans held on the market.
Goldman has been slimming down its ill-fated shopper enterprise, after a reorganization in 2022 that noticed it merge its conventional mainstays of buying and selling and funding banking.
GreenSky, which facilitates dwelling enchancment loans for shoppers, was offered to a consortium of funding corporations led by Sixth Street Partners.
Four years after introducing a bank card with Apple, the Wall Street large additionally faces a pricey exit from a partnership that’s seen by different lenders as too dangerous and unprofitable.
Goldman may have to cut back the worth of its stake to tempt bidders to take its place within the partnership, Reuters reported final month.
Goldman’s provisions for credit score losses fell to $577 million within the quarter from $972 million a yr earlier.
Meanwhile, it diminished reserves of $160 million by transferring its General Motors bank card portfolio to a class of belongings identified as held on the market. General Motors is on the lookout for a brand new companion to interchange Goldman Sachs.
Stock markets have rallied as economists and buyers develop extra assured the US will keep away from a recession. Market contributors are additionally debating when the Federal Reserve will lower rates of interest, which may act as one other catalyst for exercise.
“This was a year of execution for Goldman Sachs,” CEO David Solomon mentioned in a press release. “With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024.”
The financial institution’s shares climbed 1.3% in buying and selling earlier than the bell. They have been up 12.3% final yr, in contrast with beneficial properties of 27% for JPMorgan Chase and 10% for Morgan Stanley.
Goldman’s equity buying and selling income jumped 26% within the fourth quarter, whereas its income from asset and wealth administration rose 23% to $4.39 billion.
The unit additionally booked a acquire of $349 million from a deal to promote a part of its wealth enterprise to an impartial wealth supervisor.
Investment banking charges fell 12% to $1.65 billion, as a decline in mergers and acquisitions (M&A) offset beneficial properties from debt and inventory gross sales.
Revenue from fastened earnings, currencies and commodities (FICC) buying and selling fell 24% as weak point in rate of interest merchandise and currencies dragged down beneficial properties from mortgage merchandise.
The financial institution’s profit was $2.01 billion, or $5.48 per share, for the newest quarter, in contrast with $1.33 billion, or $3.32 per share, a yr earlier.
Analysts on common anticipated a profit of $3.51 per share, in accordance with LSEG information.
Headcount
Goldman had a headcount of 45,300 on the finish of December, 1% lower than within the third quarter and practically 7% decrease than within the year-earlier interval.
The financial institution laid off 1000’s of workers in 2023, together with cuts to its workforce in January that have been the most important because the 2008 monetary disaster.
Goldman is among the many banking giants that can pay a particular evaluation price to refill a authorities deposit insurance coverage fund (DIF) that was drained of $16 billion by the collapse of two regional banks final yr.
It acknowledged a $529 million expense tied to the price within the fourth quarter.
Platform options increase
Goldman’s platform options unit, which homes a few of its shopper operations, reported a 12% soar in income to $577 million.
The soar was pushed by greater common bank card balances, which cushioned the hit from markdowns associated to the portfolio of GreenSky loans held on the market.
Goldman has been slimming down its ill-fated shopper enterprise, after a reorganization in 2022 that noticed it merge its conventional mainstays of buying and selling and funding banking.
GreenSky, which facilitates dwelling enchancment loans for shoppers, was offered to a consortium of funding corporations led by Sixth Street Partners.
Four years after introducing a bank card with Apple, the Wall Street large additionally faces a pricey exit from a partnership that’s seen by different lenders as too dangerous and unprofitable.
Goldman may have to cut back the worth of its stake to tempt bidders to take its place within the partnership, Reuters reported final month.
Goldman’s provisions for credit score losses fell to $577 million within the quarter from $972 million a yr earlier.
Meanwhile, it diminished reserves of $160 million by transferring its General Motors bank card portfolio to a class of belongings identified as held on the market. General Motors is on the lookout for a brand new companion to interchange Goldman Sachs.
