Goldman Sachs earnings miss estimates on weak equity trading


The Goldman Sachs logo is seen on the floor of the New York Stock Exchange (NYSE) in New York, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly

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Jan 18 (Reuters) – Earnings at Goldman Sachs Group Inc (GS.N) fell nearly 13% and missed expectations on Tuesday as a less volatile stock market hurt business and dampened a bumper year for investors. transactions, sending shares of the leading Wall Street investment bank down 4%.

Bank profits were hit this quarter by weak trading volumes as the Federal Reserve slowed the pace of its asset purchases after an 18-month period of injecting liquidity into capital markets to mitigate the impact of the COVID-19 pandemic.

Goldman’s business unit reported lower fourth-quarter profit than a year earlier as a more stable economy led to less fluctuation in financial markets.

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Its revenue from global markets business, which houses trading business and accounts for about a third of the bank’s overall revenue, fell 7% to nearly $4 billion, due to weakness in equity trading. and fixed income securities.

Compared to a strong quarter a year ago, when trading volumes soared, the bank said equity underwriting revenue fell 8% due to lower revenue from offerings. secondary actions.

While net income from fixed income was flat from a year earlier at $1.86 billion, equity income fell 11%. Net revenues in global markets were also 29% lower than in the third quarter of 2021.

Like rivals, Goldman’s trading slowdown eclipsed a 45% rise in investment bank revenue to $3.80 billion as its top rainmakers raked in record fees advising on some of the biggest mergers , initial public offerings and agreements involving special purpose acquisition companies.

The country’s biggest bank, JPMorgan Chase & Co (JPM.N), also faced a slowdown in its trading arm last week, which sent its shares down as much as 6%, with analysts worrying about its forecasts of future profitability. Read more

Goldman’s net income attributable to common shareholders fell to $3.81 billion in the quarter ended Dec. 31 from $4.36 billion a year earlier.

Earnings per share fell to $10.81 from $12.08 a year earlier. Analysts on average had expected earnings of $11.76 per share, according to Refinitiv data.

Total net income rose 8% to $12.64 billion, driven by its investment banking and asset and consumer management units.

A bright spot during the quarter was Goldman’s consumer bank, Marcus. Although the unit is much smaller than traditional Main Street lenders, it grew 8%, thanks to higher credit card and deposit balances.

Wage inflation and the cost of investing in new technologies also weighed on bank profits. Goldman’s operating expenses jumped 23%, indicating significantly higher compensation and benefits costs.

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Reporting by Noor Zainab Hussain and Niket Nishant in Bengaluru and Matt Scuffham in New York; Editing by Arun Koyyur

Our standards: The Thomson Reuters Trust Principles.


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