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Goldman Sachs on Tuesday posted fourth-quarter results that topped analysts’ expectations on better-than-expected asset and wealth management revenue.
Here’s what the corporate reported versus what Wall Street analysts surveyed by LSEG, formerly often known as Refinitiv, expected:
- Earnings: $5.48 per share; it wasn’t immediately clear if that was comparable to the $3.51 estimate of analysts surveyed by LSEG.
- Revenue: $11.32 billion vs. $10.8 billion expected, in accordance with LSEG
Goldman said earnings for the quarter jumped 51% to $2.01 billion, or $5.48 per share, from a yr ago, when the bank was weighed down by loan-loss provisions and surging expenses. Companywide revenues rose 7% to $11.32 billion on growth from asset and wealth management and platform solutions divisions.
Goldman CEO David Solomon has endured a troublesome yr, due to dormant capital markets and strategic missteps. But hope has been constructing that Goldman can turn a corner after pivoting away from Solomon’s failed consumer banking efforts. The expansion engine for the bank, in accordance with Solomon, is now its asset and wealth management division, which is benefiting from the rise in private credit and other alternative assets.
“With all the things we achieved in 2023 coupled with our clear and simplified strategy, we’ve a much stronger platform for 2024,” Solomon said within the earnings release.
Asset and wealth management revenue jumped 23% from a yr earlier to $4.39 billion, topping the StreetAccount estimate by nearly $550 million, on higher revenue from equity and debt investments and rising management fees. Helped by rising markets within the fourth quarter, Goldman said it booked gains on public equities and markups in debt investments.
Other Goldman divisions met or barely missed expectations. As an example, while platform solutions revenue jumped 12% to $577 million, that was below the $612 million estimate.
In the corporate’s trading division, stronger-than-expected ends in equities mostly offset a miss in fixed income.
Equities trading revenue jumped 26% to $2.61 billion, due to derivatives activity and financing fees, topping the $2.22 billion StreetAccount estimate. Fixed income posted $2.03 billion in revenue, a 24% decline from a yr earlier on weakness in rate of interest and currencies trading, and well below the $2.53 billion estimate.
Investment banking fees fell 12% to $1.65 billion, matching the StreetAccount estimate, because the industry’s slump in accomplished acquisitions continued into late last yr.
Goldman’s core activities of investment banking and trading didn’t rebound strongly within the fourth quarter, but analysts will need to hear about the opportunity of a recovery in 2024. Early signs are that corporations which have waited on the sidelines to amass competitors or raise funds may finally be able to act this yr.
Unlike more diversified rivals, Goldman gets most of its revenue from Wall Street. That may result in outsized returns during boom times and underperformance when markets don’t cooperate.
That was reflected within the bank’s return on tangible equity, a key metric tracked by investors and analysts, which was just 8.1% for 2023, far below its medium-term goal of 15% to 17%.
The bank said it cut headcount by 7% last yr, or 3,200 positions from the top of 2022, mostly from a wave of layoffs initially of 2023.
Goldman and Morgan Stanley, which also reported fourth-quarter earnings on Tuesday, are the last of the most important U.S. banks to release results for the period. On Friday, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo each posted results that were marred by a litany of one-time items.
This story is developing. Please check back for updates.