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Lucas Jackson/Reuters
Goldman Sachs’ latest earnings report beat Wall Street expectations.
new york
CNN
—
Goldman Sachs reported a strong fourth quarter earnings report, driven primarily by impressive performance in its Assets and Wealth Management division.
The company announced Tuesday that profits rose about 51% from a year ago to just over $2 billion.
Revenue was $11.3 billion and earnings per share were $5.48, blowing away Wall Street expectations. Analysts polled by FactSet expected revenue of $10.8 billion and earnings of just $3.62 per share.
But most of Goldman’s profits did not come from its investment banking and trading operations, which are typically the New York-based bank’s most powerful divisions.
Investment banking revenue fell 12% from a year earlier to just under $1.7 billion. Trading revenue for the same period fell 2.5% to $4.6 billion.
Instead, the investment bank said it would simplify its strategy this year and focus on investing and growing its asset and wealth management sector, which is closely tied to stock market performance.
This appears to be a successful strategy, with revenue within the sector increasing 23% compared to a year ago.
“This year has been a challenging year for Goldman Sachs,” CEO and Chairman David Solomon said in a release. “Everything we achieved in 2023 and a clear, simplified strategy gives us a stronger platform for 2024.”
Last year, the bank scaled back its efforts in the consumer market and stopped offering new loans on its consumer platform, Marcus. The company is also currently dissolving credit card partnerships with Apple and General Motors.
The dissolution of the consumer division was costly. Prior to this report, Goldman posted eight consecutive quarters of declines.
Like its peers, Goldman received a lump sum assessment from the Federal Deposit Insurance Corp. to help pay for last spring’s local banking crisis. Goldman paid $529 million to clean up the mess left behind after Silicon Valley Bank and Signature Bank collapsed.
This is a high fee, but it’s lower than the scores paid by major U.S. banks.
JPMorgan Chase paid $2.9 billion to the FDIC, Bank of America $2.1 billion and Citigroup $1.7 billion.
Meanwhile, Morgan Stanley reported a 32% drop in quarterly profit in its earnings call Tuesday. Like its peers, the bank saw its revenue squeezed by similar one-time fees.
Goldman stock rose 1.5% in morning trading. Morgan Stanley stock fell 3.8%.
This story is in development and will be updated.
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