Written by Manya Saini, Noor Zainab Hussain and Saeed Azhar
(Reuters) – Goldman Sachs reported its best earnings since the third quarter of 2021, driven by bankers bringing in more fees from dealmaking and debt sales and trading strength, pushing its shares up 3% before the bell.
The Wall Street giant said Wednesday that earnings rose to $4.11 billion, or $11.95 per diluted share, in the fourth quarter ended Dec. 31, compared with $2.01 billion, or $5.48 per diluted share, a year earlier.
Banking industry executives expect stronger deal-making 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 year,” CEO David Solomon said in a statement. “I am optimistic that we have achieved or exceeded all the goals we set in our strategy to grow the company five years ago.”
Goldman’s investment banking fees rose 24% to $2.05 billion in the fourth quarter, boosted by debt security that benefited from strong financings and the sale of corporate bonds.
An industry-wide rebound in mergers and acquisitions coupled with renewed activity in equity and debt markets has lifted results in the second half of 2024 for Wall Street’s top banks.
In investment banking, equity and debt underwriting revenues jumped by 98% and 51%, respectively, in the fourth quarter. Its consulting revenue fell 4%.
Total investment banking revenues globally rose 26% to $86.8 billion in 2024, with North America up 33% from last year, according to data from Dealogic. Goldman had the second highest revenue among banks globally.
Last month, Solomon told a Reuters conference that dealmaking in stocks and mergers and acquisitions could surpass 10-year averages in 2025.
Revenue at Goldman Sachs’ asset and wealth management arm rose 8% to $4.72 billion, while revenue at its global banking and markets division increased 33% to $8.48 billion in the fourth quarter.
Stock traders at the bank continued to ride the broader stock market rally in the final three months of 2024, with revenue rising 32% to $3.45 billion.
Stocks in the United States rose to record levels, driven by optimism about the new administration’s economic policies, coupled with low interest rates.
Fixed income, currency and commodities (FICC) trading also shined with a 35% jump in revenue.
Goldman Sachs announced a raft of leadership changes on Monday as it created a new division to focus on financing large deals and making loans to corporate clients, looking to tap into the lucrative private credit market.
https://media.zenfs.com/en/reuters-finance.com/05855e9d71072a63f5bc6801ef9e93d3
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