Goldman Sachs Group Inc. traders hauled in fourth-quarter revenue that surpassed analysts’ estimates, helping the firm weather a year in which its consumer division punched a $2 billion hole in profits.
(Bloomberg) — Goldman Sachs Group Inc. traders hauled in fourth-quarter revenue that surpassed analysts’ estimates, helping the firm weather a year in which its consumer division punched a $2 billion hole in profits.
Revenue from the trading operation totaled $4.76 billion compared with predictions for $4.5 billion, driven by the fixed-income desk. The gains helped counter the industry’s dealmaking slump.
The investment-banking giant has poured billions of dollars into its retail effort, which includes the Apple Card and specialty-lending platform GreenSky. That operation, which posted revenue of $513 million for the quarter, has been a drag on earnings over the past three years.
“Against a challenging economic backdrop, we delivered double-digit returns for our shareholders in 2022,” Chief Executive Officer David Solomon said in a statement Tuesday. “Our clear, near-term focus is realizing the benefits of our strategic realignment, which will strengthen our core businesses, scale our growth platforms and improve efficiency.”
The industrywide slowdown and threat of a recession later this year pushed the bank’s leaders to ax as many as 3,200 jobs last week.
The report follows fourth-quarter results from the biggest U.S. banks on Friday, which gave investors plenty of reasons to be jittery about the outlook for the coming year. A robust resumption of activity in capital markets is still on hold while increasing provisioning for bad loans looms on the horizon for top lenders.
Goldman shares dropped 1.6% to $360 at 7:32 a.m. in New York. The stock posted a 10% decline last year.
The bank’s return-on-equity for the year dropped to 10.2%, falling below the 14% to 16% target it set for itself earlier in 2022.
The firm for the first time is showcasing the results of its key banking and trading units as a single division, an attempt to highlight its strengths relative to peers. As part of changes announced in October, Solomon also undid one of his own signature moves and reunited the wealth-management arm with the asset-management division.
Goldman also scaled back its ambitions for the consumer business, abandoning a goal to do business with the mass market. Key elements of that push have been dismantled, and what’s left has been set aside as the smallest stand-alone division, called Platform Solutions. That unit has been bolstered with the addition of the transaction-banking business.
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