Goldman Sachs Soars to New Heights with Record Profit
Strong Deal-Making Activity Drives Investment Bank’s Success
Goldman Sachs has reported its highest profit since 2021, exceeding Wall Street expectations and sending its shares soaring 3% before the market opened on Wednesday. The investment bank’s strong performance was driven by a surge in deal-making activity, debt sales, and trading strength.
Investment Banking Fees Skyrocket
Goldman’s investment banking fees rose an impressive 24% to $2.05 billion in the fourth quarter, driven by debt underwriting and a strong performance in leveraged finance and corporate bond sales. The bank’s equity and debt underwriting revenue jumped 98% and 51%, respectively, in the fourth quarter, thanks to a rebound in mergers and acquisitions, equity and debt markets.
Advisory Revenue Sees Uptick
While advisory revenue declined by 4% for the quarter, it rose for 2024 as a whole, driven by an increase in completed deals. The bank’s total investment banking revenue globally increased 26% to $86.8 billion in 2024, with North America seeing a 33% surge from a year ago.
Asset and Wealth Management Arm Sees Growth
Revenue in Goldman’s asset and wealth management arm climbed 8% to $4.72 billion, while revenue at its global banking and markets division increased by 33% to $8.48 billion in the fourth quarter. Equity traders at the bank continued to ride the broader stock market rally, with revenue surging 32% to $3.45 billion.
Fixed Income, Currency, and Commodities Trading Shine
Fixed income, currency, and commodities (FICC) trading also saw a significant jump in revenue, rising 35%. The bank’s provisions for credit losses stood at $351 million for the fourth quarter, down from $577 million a year ago, mainly due to potential losses in its credit card portfolio.
Leadership Changes and Strategic Shifts
Goldman announced a raft of leadership changes on Monday, creating a new division to focus on financing large deals and providing loans to corporate clients. The bank is also slimming down its ill-fated consumer operations after losing billions of dollars.
Outlook for 2025
CEO David Solomon expressed optimism about the bank’s prospects, saying, “We are very pleased with our strong results for the quarter and the year… I’m encouraged that we have met or exceeded almost all of the targets we set in our strategy to grow the firm five years ago.” With deal-making activity expected to remain strong in 2025, Goldman Sachs is well-positioned to continue its upward trajectory.
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