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The Goldman Sachs Group, Inc.’s (GS - Free Report) fourth-quarter 2023 earnings per share of $5.48 surpassed the Zacks Consensus Estimate of $3.47. Also, the bottom line increased 65% from the year-earlier quarter.
Shares increased 1.4% in the pre-market trading on an earnings beat. Investors seem to be bullish on the stock because of higher revenues in the Asset & Wealth Management division.
Goldman’s results have been supported by strength in the consumer banking business, while Fixed Income, Currency and Commodities Client Execution (FICC) revenues declined.
Net earnings of $2 billion rose 51% from the prior-year quarter. Our estimate for the metric was pegged at $1.90 billion.
For 2023, the company reported net earnings of $8.25 billion, plunging 24% year over year.
Revenues Increased, Expenses Rise
Net revenues for the quarter of $11.32 billion increased 7% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $10.71 billion.
Net revenues for 2023 of $46.25 billion dipped 2% from the year-ago quarter. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $45.6 billion.
Total operating expenses increased 5% year over year to $8.48 billion. Our estimate for the metric was pinned at $7.56 billion. Higher depreciation and amortization, and other expenses led to the increase.
Provision for credit losses was $577 million, down 41% from the prior-year quarter.
Quarterly Segmental Performance Mixed
The Asset & Wealth Management division generated revenues of $4.38 billion in the reported quarter, up 23% year over year. Our estimate for the metric was pegged at $2.17 billion. Results reflect higher fees from equity investments and incentive fees, offset by higher private banking and lending.
Firmwide assets under supervision were a record $2.81 trillion, up from $2.68 trillion in the prior quarter.
The Global Banking & Markets division has recorded revenues of $6.35 billion, down 3% year over year. Our estimate for the metric was $6.81 billion. The fall indicated a decline in the investment banking business (down 12%) and lower net revenues in FICC (down 24%), offset by higher equities revenues (up 26%).
The Platform Solutions division’s revenues were $577 million, rising 12% year over year. Our estimate for the metric was $874 million. The jump was driven by significantly higher revenues from consumer platforms.
Capital Ratios Deteriorate
As of Dec 31, 2023, the standardized Common Equity Tier 1 capital ratio was 14.5%, down from the prior-year quarter’s 15%. The company’s supplementary leverage ratio was 5.5%, down from the prior-year quarter’s 5.8%.
Capital Deployment Update
In 2023, Goldman returned $9.39 billion of capital to common shareholders. This included $5.80 million in share repurchases and common stock dividends of $3.59 billion.
Conclusion
While Goldman’s well-diversified business will ensure earnings stability going forward, macroeconomic uncertainty and recessionary fears will likely weigh on its financial performance. Strength in the consumer banking business is a tailwind. Active client engagement, and a solid position in announced and completed mergers and acquisitions globally are likely to act as tailwinds.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impacts of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impacts of notable items in the quarter, C recorded a loss per share of $1.16. Notably, it registered earnings of $1.16 a year ago. Our estimate was pegged at $1.15.
Citigroup witnessed growth in total loans and deposits in the quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from an FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the decline in net interest income, worsening credit quality and a dip in loan balances were the undermining factors.
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Goldman (GS) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
The Goldman Sachs Group, Inc.’s (GS - Free Report) fourth-quarter 2023 earnings per share of $5.48 surpassed the Zacks Consensus Estimate of $3.47. Also, the bottom line increased 65% from the year-earlier quarter.
Shares increased 1.4% in the pre-market trading on an earnings beat. Investors seem to be bullish on the stock because of higher revenues in the Asset & Wealth Management division.
Goldman’s results have been supported by strength in the consumer banking business, while Fixed Income, Currency and Commodities Client Execution (FICC) revenues declined.
Net earnings of $2 billion rose 51% from the prior-year quarter. Our estimate for the metric was pegged at $1.90 billion.
For 2023, the company reported net earnings of $8.25 billion, plunging 24% year over year.
Revenues Increased, Expenses Rise
Net revenues for the quarter of $11.32 billion increased 7% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $10.71 billion.
Net revenues for 2023 of $46.25 billion dipped 2% from the year-ago quarter. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $45.6 billion.
Total operating expenses increased 5% year over year to $8.48 billion. Our estimate for the metric was pinned at $7.56 billion. Higher depreciation and amortization, and other expenses led to the increase.
Provision for credit losses was $577 million, down 41% from the prior-year quarter.
Quarterly Segmental Performance Mixed
The Asset & Wealth Management division generated revenues of $4.38 billion in the reported quarter, up 23% year over year. Our estimate for the metric was pegged at $2.17 billion. Results reflect higher fees from equity investments and incentive fees, offset by higher private banking and lending.
Firmwide assets under supervision were a record $2.81 trillion, up from $2.68 trillion in the prior quarter.
The Global Banking & Markets division has recorded revenues of $6.35 billion, down 3% year over year. Our estimate for the metric was $6.81 billion. The fall indicated a decline in the investment banking business (down 12%) and lower net revenues in FICC (down 24%), offset by higher equities revenues (up 26%).
The Platform Solutions division’s revenues were $577 million, rising 12% year over year. Our estimate for the metric was $874 million. The jump was driven by significantly higher revenues from consumer platforms.
Capital Ratios Deteriorate
As of Dec 31, 2023, the standardized Common Equity Tier 1 capital ratio was 14.5%, down from the prior-year quarter’s 15%. The company’s supplementary leverage ratio was 5.5%, down from the prior-year quarter’s 5.8%.
Capital Deployment Update
In 2023, Goldman returned $9.39 billion of capital to common shareholders. This included $5.80 million in share repurchases and common stock dividends of $3.59 billion.
Conclusion
While Goldman’s well-diversified business will ensure earnings stability going forward, macroeconomic uncertainty and recessionary fears will likely weigh on its financial performance. Strength in the consumer banking business is a tailwind. Active client engagement, and a solid position in announced and completed mergers and acquisitions globally are likely to act as tailwinds.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
The Goldman Sachs Group, Inc. price-consensus-eps-surprise-chart | The Goldman Sachs Group, Inc. Quote
Currently, Goldman has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Big Banks
Citigroup Inc.’s (C - Free Report) fourth-quarter 2023 earnings per share (excluding the impacts of notable items) of 84 cents surpassed the Zacks Consensus Estimate of 73 cents. Including the impacts of notable items in the quarter, C recorded a loss per share of $1.16. Notably, it registered earnings of $1.16 a year ago. Our estimate was pegged at $1.15.
Citigroup witnessed growth in total loans and deposits in the quarter. However, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.29 surpassed the Zacks Consensus Estimate of $1.18. The figure improved 15% year over year. The adjusted figure excludes the impacts of expenses from an FDIC special assessment, severance expenses for planned actions and discrete tax benefits related to the resolution of the prior period’s tax matters.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the decline in net interest income, worsening credit quality and a dip in loan balances were the undermining factors.