Goldman Sachs Beats Profit Estimates As Equity Markets Rebound

(CTN News) – A market recovery helped Goldman Sachs beat fourth-quarter profit estimates on Tuesday, while revenue from asset and wealth management offset weaker investment banking.

There has been a rally in stock markets as economists and investors grow more confident that the US will avoid a recession. Additionally, market participants are speculating when the Federal Reserve will cut interest rates, which could act as another catalyst.

According to CEO David Solomon, this was Goldman Sachs’ year of execution. Before the bell, Morgan Stanley shares rose 1.3%, while JPMorgan Chase shares rose 27%. With our clear and simplified strategy, we have a much stronger platform for 2024.”

Asset and wealth management revenue jumped 23% to $4.39 billion in the fourth quarter, while equity trading revenue jumped 26%.

In addition, the unit realized $349 million from the sale of a portion of its wealth management business.

Investment banking fees decreased 12% to $1.65 billion as mergers and acquisitions (M&A) declined and debt and stock sales increased.

As a result of weak interest rate products and currencies, FICC trading revenue fell by 24%.

A year ago, the bank earned $1.33 billion, or $3.32 per share, compared with $2.01 billion, or $5.48 per share.

According to LSEG data, analysts should earn on average $3.51 per share.

At the end of December, Goldman Sachs had 45,300 employees, 1% fewer than in the third quarter and 7% fewer than a year earlier.

Thousands of employees were laid off in 2023, including the largest reductions since the 2008 financial crisis.

In the wake of the collapse of two regional banks last year, Goldman Sachs will pay a special assessment fee of $14 billion to refill the government deposit insurance fund (DIF).

In the fourth quarter, it recognized $529 million in fees.

Platform solutions, which houses some of Goldman Sachs consumer operations, reported a 12% increase in revenue.

Despite markdowns related to GreenSky loans held for sale, higher average credit card balances cushioned the impact of the jump.

Since merging its traditional trading and investment banking businesses in 2022, Goldman Sachs has been slimming down its ill-fated consumer business.

Sixth Street Partners led a consortium of investment firms that purchased Green Sky, which facilitated home improvement loans for consumers.

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