Goldman Sachs 4Q profits surge to $4.4 bn, topping estimates

19 Janvier, 2021, 22:48 | Auteur: Auguste Feret
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Total revenue climbed 18% to $11.7 billion.

And amid coronavirus-induced restrictions on movement, the financial giant saw lower travel and entertainment costs.

Chief Executive David Solomon told analysts on a conference call that some of the business Goldman won with top trading clients should be more sustainable than 2009 given that they occurred in a more competitive environment. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article.

Since taking over the reins from Lloyd Blankfein in 2018, Solomon has emphasised that he wants to reduce the bank's reliance on trading and investment banking.

Bank of America on Tuesday reported fourth-quarter earnings of $5.2 billion, down 23 percent from the year-ago period on a 10.5 percent drop in revenues.

"It was an exceptionally strong quarter", he said.

The bank's net income attributable to common shareholders more than doubled, to $4.4 billion, or $12.08 per share, from $1.7 billion, or $4.69 per share, in the year-earlier period.

Shares in Goldman rose some 60% since the end of October to hit an all-time high of $307.87 last week, vaulting the bank's market value above $100 billion.

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The results helped Goldman absorb a $3 billion settlement with the U.S. Department of Justice and other regulators over its role in Malaysia's 1MDB corruption scandal.

Revenue at all four businesses rose in the final quarter. Meanwhile, investment bankers are benefiting from surging demand for IPOs and a record spate of debt issuance.

Nonetheless, Marcus represents a tiny portion of Goldman's overall revenue - just 2.7% previous year, as its Wall Street businesses flourished - underscoring how hard it will be for the bank to build a consumer franchise that becomes a household name like Chase or Bank of America Corp without a substantial acquisition.

Unlike larger peers JPMorgan and Bank of America, Goldman has a relatively small consumer business, which has limited its exposure to loan defaults amid the pandemic and allowed it to focus on its core strength of closing deals.

Consumer banking revenues increased 52% in the quarter to $ 347 million and jumped 40% to $ 1.21 billion on an annual basis.

Goldman on Tuesday reaffirmed a target to grow consumer deposits to over US$125 billion over five years.

Goldman reiterated the three-year targets it set for profitability and expense savings last January, as it stayed on track with its long-term cost-cutting and returns initiatives.

The investment bank spent $13.3bn (£9.8bn) on pay and bonuses in 2020 despite Covid triggering a recession, up 8pc from the previous year but still $2bn less than the 2010 total. The bank also set aside $3.1 billion to cover bad loans, compared to $1.1 billion a year ago, reflecting the impact of the pandemic. In investment banking, Mr. Solomon said he expected activity levels in 2021 to be below those in 2020, due in part to investors starting to cool off on blank-check companies, also known as special-purpose acquisition companies, or SPACs.

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