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Goldman Sachs has reported its lowest annual profits in four years, as losses caused by its pullback from retail banking compounded a slowdown in its core business.
Net income for 2023 fell 24 per cent to $8.5bn, its lowest level since 2019.
Earnings climbed in the final quarter of the year, however. Net income rose 51 per cent from a year earlier to $2bn, with the bank’s asset and wealth management and equities trading businesses performing better than expected. Analysts polled by Bloomberg had expected quarterly net income of about $1.5bn.
Goldman took several one-off hits to profits last year — including selling its online lending business GreenSky at a loss — in what analysts characterised as a “kitchen sink” approach to clear the decks for 2024.
“With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024,” Goldman chief executive David Solomon said in a statement.
Solomon, who has been chief since October 2018, originally continued his predecessor Lloyd Blankfein’s strategy of expanding in consumer lending.
But he has since focused more on building up the bank’s asset and wealth management division to balance out the lumpier investment banking business and give Goldman the same sort of diversification that investors have welcomed at rivals JPMorgan Chase and Morgan Stanley.
Goldman on Tuesday said it had surpassed a fundraising target of $225bn at its so-called alternatives business, which includes private equity, private credit and real estate. The bank had previously said it would hit the goal by the end of 2024 and has so far raised $251bn.
Goldman’s core investment banking business continued to suffer from a drop-off in dealmaking activity in the fourth quarter, with revenues down 12 per cent from a year earlier at $1.65bn.
Goldman shares rose about 0.9 per cent in pre-market trading.
This article has been updated to correct the quarterly estimate figure.