New York-based investment bank Goldman Sachs (NYSE:GS) has outperformed Wall Street analysts’ predictions with a jump in profits, as its investment banking, wealth management and bond, currency and commodities trading divisions all thrived during the pandemic.
Goldman Sachs reported quarterly revenue of $11.74 billion, up 18% from a year ago, and posted net income of $4.5 billion – a 135% surge from the fourth quarter of 2019.
The bank reported record revenue of $9.42bn from its investment banking unit, driven by booming demand for initial public offerings and an increase in merger activity. Goldman Sachs ranked #1 in worldwide announced and completed mergers and acquisitions, worldwide equity and equity-related offerings and common stock offerings for the year.
Goldman Sachs also said it posted its best year for global markets revenue in a decade, coming in at $21.26bn (43% higher than 2019), largely due to strong trading volume in both Fixed Income, Currency and Commodities (FICC) – which included the third highest annual net revenues in intermediation and record net revenues in financing – and Equities, which included record net revenues in derivatives.
Among its other successes were Asset Management, which generated net revenues of $7.98bn, while Consumer & Wealth Management generated record net revenues of $6bn, including record Wealth Management net revenues and significantly higher Consumer Banking net revenues.
Earnings per share rose to $24.74 for 2020, up from $21.03 in 2019. In the last quarter, earning jumped to $12.08 per share, up from $4.69 a year ago, and $8.98 in July-September. Analysts had expected a profit of $7.47 per share on average, according to IBES data from Refinitiv.
Chairman and CEO David Solomon said in a press release, “it was a challenging year on many fronts” and added that “we hope this year brings much needed stability and a respite from the pandemic”.
Reuters weighed in on Goldman’s results, pointing out that the bank has benefitted from some big stock market floats recently:
“Goldman’s performance was in line with broader gains for trading units across Wall Street banks, with JPMorgan Chase also reporting stronger-than-expected results as financial market volumes remained consistently high. The Wall Street giant also benefited from record levels of capital markets activity during the quarter, as it generated handsome underwriting fees from a number of high-profile IPOs including Airbnb, Doordash, Lufax and Root”.
Meanwhile Octavio Marenzi, CEO of Opimas – a capital markets management consultancy – told The Guardian that Goldman Sachs’ earnings were “shockingly good”.
“We were expecting a strong performance, but Goldman outperformed in almost every business line. While other banks, such as JP Morgan and Citigroup had to contend with retail and corporate banking units that were a bit soft, Goldman’s activities are squarely focused on investment banking and trading—areas that did well everywhere, but especially well at Goldman Sachs”.
Shares at the Wall Street bank were down -0.72% to USD 299.00 as of GMT 15:56, stifling recent gains which saw the stock hit an annual peak of USD 309.41 last week.
