Goldman Sachs ended 2023 strongly despite investment banking weakness
Goldman Sachs reported that profit jumped at the end of 2023 as the bank’s asset and wealth management arm helped offset continued weakness in investment banking.
In the three months to December, the bank’s net earnings climbed 51 per cent to $2.0bn, up from $1.3bn in the same period last year.
The jump in profit in the final quarter came thanks to a seven per cent boost in revenue and lower provisions for credit losses than last year.
Its asset and wealth management division put in a strong quarter on the back of higher equity revenue. Revenue in the division was 23 per cent higher than last year.
Goldman’s platform solutions business, which houses its much slimmed down consumer arm, also saw revenue grow. “The increase in consumer platforms net revenues primarily reflected significant growth in average credit card balances,” the bank said.
Provision for credit losses meanwhile dropped over 40 per cent on last year, although it still came in at over $500m.
This helped to offset continued weakness in areas of traditional strength for Goldman. It saw a 12 per cent fall in investment banking fees and a 24 per cent drop in revenue from fixed income, currencies and commodities (FICC).
Goldman noted it had suffered from the continued “decline in industry-wide completed mergers and acquisitions volumes”.
Despite the strong end to the year, Goldman slipped to its worst annual performance in four years, as profit dropped 24 per cent in 2023 as a whole.
Its poor year came as the bank struggled with a slowdown in capital markets activity. Revenue from investment banking fell 16 per cent in 2023. In response to falling M&A volumes, Goldman cut its headcount by seven per cent over the course of the year.
The bank also booked heavy losses related to its expensive foray into consumer banking, including the sale of its its GreenSky platform. Goldman agreed to sell Greensky, a fintech platform which provides loans for home improvement, to a consortium of investors led by Sixth Street in October last year.
David Solomon, chief executive of the Wall Street giant, said “this was a year of execution for Goldman Sachs”.
“With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024,” he added.
Goldman’s shares rose 1.6 per cent at the open in New York on Tuesday.