Goldman Sachs profit surges as investment banking, trading fuel bumper quarter

By Manya Saini, Noor Zainab Hussain and Saeed Azhar

(Reuters) -Goldman Sachs posted its best profit because the third quarter of 2021,driven by bankers who brought in additional fees from dealmaking, debt sales and strength in trading, sending its shares up 3% before the bell.

Profit rose to $4.11 billion, or $11.95 per diluted share, for the fourth quarter ended Dec. 31, compared with $2.01 billion, or $5.48 per diluted share, a 12 months ago, the Wall Street giant said on Wednesday.

Banking industry executives anticipate stronger dealmaking activity this 12 months because the U.S. Federal Reserve cuts rates of interest and President-elect Donald Trump’s pro-business comments fuel optimism amongst investors.

“We’re very happy with our strong results for the quarter and the 12 months,” CEO David Solomon said in an announcement. “I’m encouraged that we now have met or exceeded almost the entire targets we set in our technique to grow the firm five years ago.”

Goldman’s investment banking fees rose 24% to $2.05 billion within the fourth quarter, powered by debt underwriting that benefited from strong leveraged finance and company bond sale.

An industry-wide recovery in mergers and acquisitions together with renewed activity in equity and debt markets lifted results higher within the second half of 2024 for Wall Street’s top banks.

Inside investment banking, equity and debt underwriting revenue jumped 98% and 51%, respectively, within the fourth quarter. Its advisory revenue declined by 4%.

Total investment banking revenue globally increased 26% to $86.8 billion in 2024, with North America surging 33% from a 12 months ago, in keeping with 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 $4.72 billion, while revenue at its global banking and markets division increased by 33% to $8.48 billion within the fourth quarter.

Equity traders on the bank continued to ride a broader stock market rally in the ultimate three months of 2024, with revenue surging 32% to $3.45 billion.

Stocks within the U.S. have blown through record highs, fueled by optimism concerning the recent administration’s economic policies, combined with lower rates of interest.

Fixed income, currency and commodities (FICC) trading also shined with a 35% jump in revenue.

Goldman announced a raft of leadership changes on Monday because it created a recent division to give attention to financing large deals and providing loans to corporate clients, seeking to capitalize on the lucrative private credit market.

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