As its traders profited from a spike in market activity and its investment bankers earned greater fees from deals and debt sales, Goldman Sachs (GS) exceeded Wall Street estimates to post its largest quarterly profit in almost three years.
Early trading on Wednesday saw a 5% increase in the investment bank’s shares as Goldman reported that its earnings for the fourth quarter ended December 31 increased to $4.11 billion, or $11.95 per diluted share, from $2.01 billion, or $5.48 per diluted share, a year earlier.
According to estimations made by LSEG, its EPS exceeded the $8.22 that analysts had anticipated.
Results for Wall Street’s leading banks improved in the second half of 2024 due to a rebound in mergers and acquisitions across the board as well as a resurgence in the equities and debt markets.
Chris Kotowski, a banking analyst at Oppenheimer & Co., wrote in a note, “We have been bullish on GS stock because we think the market is not fully absorbing the upside potential of a strong M&A cycle.”
Due to leveraged financing activity, private placements, secondary and initial public offerings, and other factors, investment banking’s revenue from equity and debt underwriting increased by 98% and 51%, respectively, in the fourth quarter.
In the fourth quarter, Goldman’s global banking and markets division had a 33% gain in revenue to $8.48 billion, while its asset and wealth management arm saw an 8% increase to $4.72 billion.
Solomon stated at a Reuters conference last month that in 2025, mergers and acquisitions and equity dealmaking may surpass 10-year averages.
According to data from Dealogic, total investment-banking revenue climbed 26% to $86.8 billion globally in 2024, with North America seeing a 33% gain from the previous year. Globally, Goldman had the second-highest revenue of any bank.
Goldman Sachs’ advisory revenue declined by 4% for the quarter, but rose for 2024, owing to a rise in completed deals, the bank said.
Goldman’s investment-banking fees rose 24% to $2.05 billion in the fourth quarter, powered by debt underwriting that benefited from strong leveraged finance and corporate bond sales.
BRISK DEALMAKING
In a statement, CEO David Solomon said, “We are very happy with our good achievements for the quarter and the year.” “I am encouraged by the fact that we have achieved or surpassed nearly every goal we established in our strategy to expand the company five years ago.”
As the U.S. Federal Reserve lowers interest rates and President-elect Donald Trump’s pro-business remarks bolster investor confidence, banking industry executives expect more dealmaking activity this year.
