Goldman Sachs, Morgan Stanley 4Q Profits Still Beat Expectations

By Jace Dela Cruz

Jan 17, 2024 06:21 AM EST

Goldman Sachs has reported a profit surge of 51% from a year earlier. According to the Associated Press, the investment bank attributed this growth to robust market returns and a strong performance in its wealth management division during the last three months of 2023. 

Goldman Sachs Expected To Cut Hundreds Of Jobs This Month
(Photo : Michael M. Santiago/Getty Images)
NEW YORK, NEW YORK - SEPTEMBER 13: The Goldman Sachs logo is seen on at the New York Stock Exchange on September 13, 2022 in New York City.

Goldman Sach Records $2 Billion Profit

Despite concluding a challenging year in 2023, with profits declining by nearly a third compared to 2022, Goldman Sachs swiftly navigated through this turnaround phase. The bank faced losses in its consumer banking franchise and implemented layoffs in 2023 as part of its strategic restructuring efforts.

In the last quarter of the year, Goldman Sachs recorded a profit of $2 billion, marking a noteworthy improvement from the $1.33 billion recorded in the same period a year earlier. On a per-share basis, the earnings amounted to $5.48 per share, beating analysts' expectations.

Goldman Sachs faced hurdles in investment banking and advising revenues, with a slowdown in dealmaking activities in 2023 due to high financing costs, leading to fewer significant deals.

The bank saw a substantial increase in the investments that it had placed in other companies, with an $838 million gain, reflecting a good market performance in the last three months of the year. However, the full-year performance presented challenges, with a 16% decline in investment banking fees and an 18% reduction in trading activities.

In 2023, Goldman Sachs unveiled that it would lessen its Marcus consumer banking division, and it was reported that the bank wanted to sell off its credit card division. The bank's return on common equity for last year was 7.5%, a figure below the desired 10% by Goldman and other banks.

In response to last year's challenges, Goldman Sachs implemented a 7% reduction in its workforce, and the fund it set aside for benefits and compensation this year was up at a modest 2%

READ ALSO: Goldman Sachs Says 'The Great Disinflation' Is Under Way, Setting the Stage for 5 Eventual Fed Rate Cuts 

Aside From Goldman Sachs, Morgan Stanley Also Reported its Fourth-Quarter Results

Morgan Stanley also reported its fourth-quarter results on Tuesday. Goldman Sachs's rival also had a sluggish performance in its investment bank due to the drop-off in dealmaking activity.

Morgan Stanley reported $9.1 billion in net income for 2023, an 18% lower from last year. In the fourth quarter, the bank's net income was down 37% to $1.5 billion.

Despite its lackluster annual profits, Morgan's fourth-quarter results still beat analysts' expectations. Many companies reportedly held off doing any massive deals in 2023 because of the high cost of financing, which means Goldman Sachs and the other investment banks had fewer deals to put together.

READ MORE: Goldman Sachs Identifies 2 Healthcare Stocks With up to 130% Upside Potential  

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics