Goldman Sachs Group Inc. cruised past estimates as its equity traders delivered their best year on record.
The firm’s fourth-quarter profits more than doubled to $4.1 billion, buoyed by strength in its investment bank, expansion of its money-management business and a surprise $472 million gain from balance-sheet bets.
After Goldman ended 2024 as the best-performing stock among major US banks with a 48% advance, investors will be scouring earnings for signs it can sustain that momentum. The bank is positioning itself for a long-awaited resurgence in deals after ditching major parts of a consumer foray.
“I’m encouraged that we have met or exceeded almost all of the targets we set in our strategy to grow the firm five years ago,” Chief Executive Officer David Solomon said in a statement.
The New York-based bank called out the improving CEO confidence, increasing activity from buyout firms and the likely rollback of onerous regulatory proposals as catalysts that will help drive an improvement in results.
Revenue in the last three months of the year was $13.87 billion, also beating estimates. Goldman shares now trade at almost 1.7 times their book value, a striking turnaround from just over a year ago when it had slid below 1.
The shares climbed 2% in early New York trading on Wednesday. Return on equity — a measure that tracks how profitably the bank invests shareholder equity — jumped to 14.6%, significantly ahead of estimates and in line with the long-term targets the bank has set for itself.
The fixed-income trading business posted $2.74 billion in revenue, driven by gains in currencies, mortgages and credit products. The stock-trading unit logged $3.45 billion in the quarter. That pushed the full-year haul from that group to $13.4 billion, which amounted to record net revenue, according to Goldman.
Investment-banking revenue of $2.05 billion compared with analysts’ average estimate of $2 billion. Merger advisory fees were $960 million. That left it trailing rival JPMorgan Chase & Co. once again with the larger bank notching $1.1 billion from that business. Goldman has typically dominated this business but JPMorgan has eclipsed its haul at least twice this year.
Goldman’s equity-capital business logged $499 million and debt-underwriting revenue was $595 million.
Goldman’s asset- and wealth-management business posted revenue of $4.72 billion, up 8% from a year earlier. For the full year, management fees from the AWM unit exceeded $10 billion as the assets it oversees grew to $3.1 trillion.
The results in the division included a big gain in equity investments that it said was tied to just the type of investments the firm has been trying to wind down.
The bank has been shifting away from betting with its balance sheet to a model where it relies on investing on the behalf of others. Still, some of those legacy investments that the firm is looking to exit delivered mark-to-market net gains from investments in public equities. That lifted revenue from equity investments to more than double of what analysts had penciled in for the quarter.
The bank has set aside $16.7 billion for compensation and benefits, an 8% jump from a year earlier.
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