© Reuters. FILE PHOTO: The Goldman Sachs logo is seen on the trading floor of the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/ Andrew Kelly/File Photo
By Saeed Azhar and Niket Nishant
(Reuters) -Goldman Sachs' profits rose 51% in the fourth quarter as its equity traders capitalized on a recovery in markets and revenue from its asset and wealth management business rose, offsetting weakness in banking. investment.
The bank reported a profit of $2.01 billion, or $5.48 per share, for the latest quarter, compared with $1.33 billion, or $3.32 per share, a year earlier.
“This was a year of execution for Goldman Sachs,” CEO David Solomon said in a statement. “With everything we accomplished in 2023, along with our clear and simplified strategy, we have a much stronger platform for 2024.”
The bank's shares rose 1.7% to $384.50 in pre-bell trading. They were up 12.3% last year, compared to gains of 27% for JPMorgan Chase (NYSE and 10% for Morgan Stanley.
Stock markets have recovered as economists and investors become more confident that the United States will avoid a recession. Market participants are also debating when the Federal Reserve will cut interest rates, which could act as another catalyst for activity.
Goldman's stock trading revenue rose 26% in the fourth quarter. Revenue from the asset and wealth management business also rose 23% to $4.39 billion, helped by gains from equity and debt investments.
Investment banking fees fell 12% to $1.65 billion as a decline in mergers and acquisitions (M&A) offset gains from debt and equity sales.
Revenue from fixed income, foreign exchange and commodities (FICC) trading fell 24% as weakness in interest rate and foreign exchange products dragged down gains in mortgage products.
STAFF
Goldman had a workforce of 45,300 at the end of December, down 1% from the third quarter and almost 7% down from the same period a year earlier.
The bank laid off thousands of employees in 2023, including staff cuts in January that were the largest since the 2008 financial crisis.
Goldman is among the banking giants that will pay a special assessment fee to replenish a government deposit insurance fund (DIF) that was drained of $16 billion by the collapse of two regional banks last year.
It acknowledged a $529 million expense tied to the fee in the fourth quarter.
PROMOTION OF PLATFORM SOLUTIONS
Goldman's platform solutions unit, which houses some of its consumer operations, reported a 12% increase in revenue to $577 million.
The jump was driven by higher average credit card balances, which cushioned the impact of downgrades related to the GreenSky loan portfolio held for sale.
Goldman has been scaling back its ill-fated consumer business, following a reorganization in 2022 that saw it merge its traditional commercial and investment banking pillars.
GreenSky, which facilitates home improvement loans to consumers, was sold to a consortium of investment firms led by Sixth Street Partners.
Four years after introducing a credit card with Apple (NASDAQ:), the Wall Street giant is also facing a costly exit from a partnership that other lenders consider too risky and unprofitable.
Goldman may need to reduce the value of its stake to entice bidders to take its place in the partnership, Reuters reported last month. It also plans to eliminate co-branded credit cards with General Motors (NYSE:).
The provision for credit losses was $577 million, compared with $972 million a year earlier, Goldman said. The bank reduced $160 million of reserves related to the transfer of General Motors' card portfolio to held for sale.
