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2025-01-15 14:38
Goldman Sachs posted its biggest profit since the third quarter of 2021 to beat Wall Street expectations, driven by bankers who brought in more fees from dealmaking, debt sales and strength in trading.
The investment bank’s shares rose 2.6% before the bell on Wednesday as it earned $11.95 per share in the fourth quarter, compared with $8.22 expected by analysts, according to estimates compiled by the London Stock Exchange Group.
Banking industry executives anticipate stronger dealmaking activity this year as the US Federal Reserve cuts interest rates and President-elect Donald Trump’s pro-business comments fuel optimism among investors.
“We are very pleased with our strong results for the quarter and the year,” CEO David Solomon said in a statement. “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.”
Goldman’s investment-banking fees rose 24% to $2.05bn in the fourth quarter, powered by debt underwriting that benefited from strong leveraged finance and corporate bond sales.
An industry-wide recovery in mergers and acquisitions along with renewed activity in equity and debt markets lifted results in the second half of 2024 for Wall Street’s top banks.
“We have been bullish on GS [Goldman Sachs] stock because we think the market is not fully incorporating the upside potential of a strong M&A [mergers and acquisitions] cycle,” said Chris Kotowski, banking analyst at Oppenheimer & Co, in a note.
Within investment banking, equity and debt underwriting revenue jumped 98% and 51%, respectively, in the fourth quarter, helped by secondary and initial public offerings, private placements and leveraged finance activity.
Goldman Sachs’ advisory revenue declined by 4% for the quarter, but rose for 2024, owing to a rise in completed deals, the bank said.
Total investment-banking revenue globally increased 26% to $86.8bn in 2024, with North America surging 33% from a year ago, according to data from Dealogic. Goldman earned the second-highest revenue across banks globally.
Last month, Solomon said at a Reuters conference that dealmaking in equities and mergers and acquisitions could exceed 10-year averages in 2025.
Revenue in Goldman’s asset and wealth management arm climbed 8% to $4.72bn, while revenue at its global banking and markets division increased by 33% to $8.48bn in the fourth quarter.
Equity traders at the bank continued to ride a broader stock market rally in the final three months of 2024, with revenue surging 32% to $3.45bn. It posted a record net annual revenue in equities.
Stocks in the US have blown through record highs, fueled by optimism about the new administration’s economic policies, combined with lower interest rates.
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