Goldman Sachs Sees 13% Drop in Q4 Profits

Goldman Sachs saw its profits decline by 13% in the fourth quarter, the banking giant announced Tuesday (Jan. 18).

As The Wall Street Journal reported, Goldman’s profits dropped to $3.94 billion or $10.81 a share, short of analysts’ forecasts of $11.77 per share.

Meanwhile, Goldman saw its revenue increase to $12.64 billion — an 8% growth — slightly surpassing the forecast of a little over $12 billion. And like its contemporaries JPMorgan Chase and Citigroup, Goldman Sachs enjoyed a sharp increase from revenue from investment banking, up 45% amid continued demand for mergers and acquisitions.

The Journal report notes that while Wall Street is still Goldman Sachs Sees 13% Drop in Q4 Profitsgenerating profits, Goldman Sachs is trying to boost its direct-to-consumer businesses. The bank saw revenue from its consumer and wealth management arms rise by 19% in the fourth quarter, while consumer-banking revenue rose 8% as consumers carried larger credit card balances.

Goldman’s operating expenses were $7.27 billion, up 23% from the same period a year earlier. Compensation expenses rose 31% to $3.25 billion as Goldman Sachs, like other Wall Street firms, fights to keep rainmakers on staff to preserve the momentum of the past few years. Goldman also boosted salaries for lower-level bankers last year, as these employees found their entry-level tasks less enjoyable when working from home.

Read more: Analysts Expect Big Banks to Post Record Profits for ’21

Goldman’s earnings report came four days after JPMorgan Chase and Citigroup both released their fourth quarter profit numbers, showing declines of 14% and 26%, respectively.

These banks have seen historic growth during the COVID-19 pandemic, fueled by factors such as a golden age of deal making and a profitable mortgage market.

“With all respect to the fact that people are suffering in COVID and all that, the fact is, in spite of omicron, in spite of supply chains, 2021 was one of the best growth years ever,” JPMorgan CEO Jamie Dimon said last week. “And 2022 looks like it will [be] actually pretty good.”