The Goldman Sachs Group, Inc.’s (GS - Free Report) fourth-quarter 2021 earnings per share of $10.81 have lagged the Zacks Consensus Estimate of $12.10. Further, the bottom line fell 10.5% from the year-earlier quarter.
The stock dipped 3.9% during the pre-market trading, reflecting investors’ concerns over the results. Notably, the full-day trading session will display a clearer picture.
While strength in the debt underwriting, wealth management and consumer banking businesses acted as a tailwind, the bank’s results were hurt by lower Fixed Income, Currency and Commodities Client Execution (“FICC”) revenues.
Impressive financial advisory revenues, owing to the rise in industry-wide completed mergers and acquisition transactions, acted as tailwinds.
Net earnings of $3.94 billion decreased 13% from the prior-year quarter.
For 2021, earnings per share of $59.45 were higher than the year-ago period’s $12.08. However, earnings lagged the Zacks Consensus Estimate of $60.70. Results included the impacts of $9.51 related to net provisions for litigation and regulatory proceedings during the year.
Revenues Jump, Expenses Rise
Net revenues of $12.64 billion rose 8% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $12.09 billion.
For 2021, the company reported revenues of $59.34 billion, up 33% year over year. Further, revenues beat the Zacks Consensus Estimate of $58.72 billion.
Total operating expenses flared up 23% year over year to $7.27 billion.
Provision for credit losses was $344 million, lower than $293 million in the prior-year quarter.
Mixed Segmental Performance
The Investment Banking (IB) division generated revenues of $3.79 billion in the reported quarter, up 45% year over year. Results reflect higher net revenues in financial advisory, supported by a significant increase in completed mergers and acquisition volumes. Corporate lending revenues of $192 million significantly increased from the prior-year quarter. Tough comps from the prior-year quarter resulted in a decline in equity underwriting revenues.
The Global Markets division recorded revenues of $3.99 billion, down 7% year over year. The downtick indicated a decline in net revenues in FICC due to lower intermediation net revenues. Also, a decline in equities revenues (11%) was recorded due to lower equities intermediation.
The Consumer and Wealth Management division’s revenues were $1.97 billion, 19% higher than the year-ago reported figure. Increased revenues from wealth management (up 22%) and consumer banking (up 8%) resulted in the upsurge.
The Asset Management division recorded revenues of $2.89 billion, indicating a 10% year-over-year decline. The downside resulted from notably lower net revenues in equity investments as well as lending and debt investments.
Firmwide assets under supervision reached a record $2.47 trillion, up 15.5% year over year.
Capital Position Weak, Profitability Down
As of Dec 31, 2021, the standardized Common Equity Tier 1 capital ratio was 14.2%. The figure was down from the prior-year quarter’s 14.7%. The company’s supplementary leverage ratio was 5.6% as of Dec 31, 2021, down from the prior-year quarter figure of 7%.
Also, return on average common shareholders’ equity (on an annualized basis) decreased to 15.6% in the reported quarter.
Capital Deployment Update
In the quarter under review, Goldman returned $1.20 billion of capital to common shareholders. This included share repurchases worth $500 million and common stock dividends of $698 million.
Conclusion
Goldman’s results highlight a disappointing end to the year. Elevated mergers and acquisition deals were the driving factors. The company’s well-diversified business, apart from its core IB operations, will ensure earnings stability going forward.
However, increasing expenses hurt bottom-line growth.
Currently, Goldman has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Banks
First Republic Bank’s fourth-quarter 2021 earnings per share of $2.02 have surpassed the Zacks Consensus Estimate of $1.91. Additionally, the bottom line improved 26.3% from the year-ago quarter.
First Republic’srevenues were $1.37 billion in the December-end quarter, up 26.9% year over year. The figure also surpassed the Zacks Consensus Estimate of $1.34 billion.
Citigroup (C - Free Report) delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 handily outpaced the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter.
Citigroup’s revenues increased 1% year over year to $17.02 billion in the December-ended quarter. The top line, however, lagged the Zacks Consensus Estimate of $17.06 billion.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate of 1.09. Also, the bottom line improved 86% year over year.
Wells Fargo’s total quarterly revenues were $20.86 billion, surpassing the Zacks Consensus Estimate of $18.73 billion. Moreover, the top line was higher than the year-ago quarter’s $18.5 billion.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
See New Top 10 Stocks >>
The Goldman Sachs Group, Inc.’s (GS - Free Report) fourth-quarter 2021 earnings per share of $10.81 have lagged the Zacks Consensus Estimate of $12.10. Further, the bottom line fell 10.5% from the year-earlier quarter.
The stock dipped 3.9% during the pre-market trading, reflecting investors’ concerns over the results. Notably, the full-day trading session will display a clearer picture.
While strength in the debt underwriting, wealth management and consumer banking businesses acted as a tailwind, the bank’s results were hurt by lower Fixed Income, Currency and Commodities Client Execution (“FICC”) revenues.
Impressive financial advisory revenues, owing to the rise in industry-wide completed mergers and acquisition transactions, acted as tailwinds.
Net earnings of $3.94 billion decreased 13% from the prior-year quarter.
For 2021, earnings per share of $59.45 were higher than the year-ago period’s $12.08. However, earnings lagged the Zacks Consensus Estimate of $60.70. Results included the impacts of $9.51 related to net provisions for litigation and regulatory proceedings during the year.
Revenues Jump, Expenses Rise
Net revenues of $12.64 billion rose 8% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $12.09 billion.
For 2021, the company reported revenues of $59.34 billion, up 33% year over year. Further, revenues beat the Zacks Consensus Estimate of $58.72 billion.
Total operating expenses flared up 23% year over year to $7.27 billion.
Provision for credit losses was $344 million, lower than $293 million in the prior-year quarter.
Mixed Segmental Performance
The Investment Banking (IB) division generated revenues of $3.79 billion in the reported quarter, up 45% year over year. Results reflect higher net revenues in financial advisory, supported by a significant increase in completed mergers and acquisition volumes. Corporate lending revenues of $192 million significantly increased from the prior-year quarter. Tough comps from the prior-year quarter resulted in a decline in equity underwriting revenues.
The Global Markets division recorded revenues of $3.99 billion, down 7% year over year. The downtick indicated a decline in net revenues in FICC due to lower intermediation net revenues. Also, a decline in equities revenues (11%) was recorded due to lower equities intermediation.
The Consumer and Wealth Management division’s revenues were $1.97 billion, 19% higher than the year-ago reported figure. Increased revenues from wealth management (up 22%) and consumer banking (up 8%) resulted in the upsurge.
The Asset Management division recorded revenues of $2.89 billion, indicating a 10% year-over-year decline. The downside resulted from notably lower net revenues in equity investments as well as lending and debt investments.
Firmwide assets under supervision reached a record $2.47 trillion, up 15.5% year over year.
Capital Position Weak, Profitability Down
As of Dec 31, 2021, the standardized Common Equity Tier 1 capital ratio was 14.2%. The figure was down from the prior-year quarter’s 14.7%. The company’s supplementary leverage ratio was 5.6% as of Dec 31, 2021, down from the prior-year quarter figure of 7%.
Also, return on average common shareholders’ equity (on an annualized basis) decreased to 15.6% in the reported quarter.
Capital Deployment Update
In the quarter under review, Goldman returned $1.20 billion of capital to common shareholders. This included share repurchases worth $500 million and common stock dividends of $698 million.
Conclusion
Goldman’s results highlight a disappointing end to the year. Elevated mergers and acquisition deals were the driving factors. The company’s well-diversified business, apart from its core IB operations, will ensure earnings stability going forward.
However, increasing expenses hurt bottom-line growth.
Currently, Goldman has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Banks
First Republic Bank’s fourth-quarter 2021 earnings per share of $2.02 have surpassed the Zacks Consensus Estimate of $1.91. Additionally, the bottom line improved 26.3% from the year-ago quarter.
First Republic’srevenues were $1.37 billion in the December-end quarter, up 26.9% year over year. The figure also surpassed the Zacks Consensus Estimate of $1.34 billion.
Citigroup (C - Free Report) delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 handily outpaced the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter.
Citigroup’s revenues increased 1% year over year to $17.02 billion in the December-ended quarter. The top line, however, lagged the Zacks Consensus Estimate of $17.06 billion.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate of 1.09. Also, the bottom line improved 86% year over year.
Wells Fargo’s total quarterly revenues were $20.86 billion, surpassing the Zacks Consensus Estimate of $18.73 billion. Moreover, the top line was higher than the year-ago quarter’s $18.5 billion.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
See New Top 10 Stocks >>
Get the latest research report on GS - FREE
Get the latest research report on WFC - FREE
Get the latest research report on C - FREE