Goldman Sachs more than doubles profit on trading boost
Goldman Sachs more than doubled its profits in the fourth quarter helped by a boom in its investment banking and trading activity.
The New York bank reported profit of $4.36bn, up from $1.72bn a year earlier, with revenue rising to a record $11.7bn for the quarter. Earnings per share rose to $12.08 per share, nearly double what analysts had expected.
The results reflect a strong year for Goldman’s investment bank and trading desks, with its investment banking arm hitting record revenues of $2.6bn in the quarter.
The increase reflected higher net revenues in underwriting and financial advisory which was partially offset by a net loss in corporate lending.
Its global markets arm, which houses its trading business, saw its best performance in a decade with revenues jumping 23 per cent to $4.27bn.
Goldman traders will likely be eyeing a pay rise as the bank set set aside $13.1bn to pay out bonuses and payroll this year, an eight per cent increase on the previous year.
The fourth quarter earnings are another indication of a strong year for Wall Street banks despite the pandemic. Last week JP Morgan and Citigroup reported better-than-expected fourth quarter earnings last week.
While Citigroup reported a seven per cent decline in profit to the equivalent of $2.08 per share, it beat the analyst consensus of $1.34 per share. Similarly JP Morgan reported a 42 per cent jump in profit to $12.1bn.
Both banks were boosted by the release of cash reserves they had built up for bad loans. Goldman also moved some of its money out of its reserves but its exposure is significantly smaller than its peers.