Goldman Sachs Beats Q4 Estimates



Key takeaways

On January 16, Goldman Sachs (GS) reported better-than-expected fourth-quarter earnings results. The bank’s top line fell slightly YoY (year-over-year), reflecting lower underwriting revenue in its Investment Banking segment, net losses from investments in public equities in its Investing & Lending segment, and lower net revenue from credit products in its Institutional Client Services segment.

Despite the slight YoY fall, Goldman Sachs’ total revenue surpassed analysts’ expectations thanks to the significant increase in its net interest income coupled with stellar growth in its financial advisory fees. Higher revenues, a considerable decline in the effective tax rate, and share repurchases supported the bank’s bottom line, which handily surpassed Wall Street’s estimates. However, higher operating expenses remained a drag.

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Bank of America (BAC) also reported strong fourth-quarter results today, with higher rates, growth in loans and deposits, and operating leverage driving its revenue and earnings. Meanwhile, JPMorgan Chase (JPM) disappointed with its fourth-quarter results, missing analysts’ estimates on lower fixed income revenue and higher provisions.

Citigroup (C), which reported its fourth-quarter results on January 14, missed analysts’ revenue estimates on weak fixed income revenue. However, operating leverage, share repurchases, and a decline in the effective tax rate helped the bank exceed analysts’ earnings estimates.

Key fourth-quarter financials

Goldman Sachs posted total revenue of $8.08 billion in the fourth quarter, better than analysts’ consensus estimate of $7.63 billion. Its fourth-quarter operating expenses increased ~9% YoY.

Goldman Sachs posted EPS of $6.04 in the quarter, handily surpassing Wall Street’s estimate of $4.45.


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