Goldman Sachs earns more than double on subscription, increasing trading

(Reuters) – Goldman Sachs Group Inc downplayed Wall Street estimates as its fourth-quarter profit more than doubled, fueled by another outstanding performance in its trading business and an increase in fees from by entering into a series of successful IPOs.

Income from global markets, home to the bank’s flagship business, recorded its best annual performance in a decade. Unit sales increased 23% to $ 4.27 billion in the quarter, reaching $ 21.2 billion for the full year.

Investment banking revenue increased 27% to $ 2.61 billion during the quarter, driven primarily by equity underwriting, which increased 195% from same time last year.

The bank’s shares rose 2.6% in early trading, adding a 20% gain over the past year.

Total revenue increased 18% to $ 11.74 billion. The bank’s net income applicable to common shareholders rose to $ 4.36 billion, or $ 12.08 per share, in the quarter ended December 31.

Analysts had expected an average profit of $ 7.47 per share, according to the IBES estimate from Refinitiv.

“We hope this year brings much needed stability and respite from the pandemic, but we remain prepared to manage a wide range of results, “said CEO David Solomon, as the bank reiterated the three-year goals it had set for profitability and spending savings last January.

Goldman’s performance was in line with broader gains for trading units in Wall Street banks, with JPMorgan Chase also reporting stronger than expected results as financial market volumes remained consistently high.

Record levels of capital market activity during the quarter helped the Wall Street giant generate attractive entry fees from a series of high-profile IPOs including Airbnb, Doordash, Lufax and Root.

Goldman’s latest performance was all the more impressive, as it comfortably absorbed a $ 3 billion hit to its annual profits, after reaching an agreement with the US Department of Justice and other US and foreign regulators on its role. in Malaysia’s 1MDB corruption scandal.

Unlike the larger companies JPMorgan and Bank of America, Goldman has a relatively small consumer business, which limited its exposure to loan defaults during the pandemic and allowed it to focus on its core strength in closing deals.

Even so, the bank kept a plan to build its consumer loans and credit card businesses.

Consumer banking revenue increased 52% in the quarter to $ 347 million and 40% to $ 1.21 billion year-on-year. The business is still tiny compared to the company’s other large revenue generators, accounting for only a fraction of the total in 2020.

Goldman’s most comparable peer, Morgan Stanley, will conclude earnings season for big banks on Wednesday.

Reportage by Anirban Sen in Bengaluru and Matt Scuffham in New York; Editing by Saumyadeb Chakrabarty