Goldman Sachs revealed fourth-quarter earnings Tuesday, shattering Wall Street’s expectations for profit and revenue owing to an exceptional performance from its equities trading and investment banking divisions.
Earnings Results
The bank reported earnings of $12.08 per share, well above forecasts of $7.47 per share done by Refinitiv’s analysts. Revenue was $11.74 billion, exceeding estimates by around $1.75 billion. As compared to the same period last year, revenue increased 18% while profits have skyrocketed 135%.
Revenue Breakdown
Equity trading surged 40% as compared to the previous year to $2.39 billion, outrunning expectations of $1.89 billion. Fixed income operations lagged generating $1.88 billion in revenue compared to forecasts of $2.06 billion.
Investment banking revenue jumped 27% to $2.61 billion, outpacing the $2.15 billion estimate. The bank pointed out that higher revenue from underwriting stock and successful merger deals contributed to the investment banking revenue.
Revenue from asset management increased 7% to $3.21 billion while wealth management revenue climbed 17% to $1.65 billion.
Consumer Finance
Global co-head of financial institution coverage for MUFG Mark Doctoroff said that big banks that advise on mergers and IPOs have been doing well. Banks that deal with consumers and smaller local merchants have been affected more by the pandemic. Yet, Goldman Sachs is aiming to push into consumer finance.
Marcus By Goldman Sachs
The bank manages an online banking firm under the name Marcus by Goldman Sachs which offers loans and savings accounts. Goldman Sachs is planning to grow it further.
Marqeta
It announced last week its partnership with card issuing firm Marqeta to start offering digital checking accounts to customers later this year. Goldman Sachs also has a stake in Marqeta.
Mastercard
The bank also announced its collaboration with global payment giant Mastercard to offer General Motors-branded credit cards. It has also teamed up with Apple for producing Apple Card.
Shares
Shares of Goldman Sachs jumped 2.6% to $308.72 in premarket trading Tuesday. Last week, the shares hit a record high of $309.41. They increased 11% in 2020 as compared to the 4.3% decline in the KBW Bank Index. The stocks have gained around 15% in 2021 so far and remain close to breaking their record high.
Bank of America also reported fourth-quarter earnings today which exceeded analysts’ estimates for profit.
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