Goldman Sachs Group Inc. (NYSE:GS) felt the wrath of the market despite reporting its highest profit in a decade and revenues topping Wall Street expectations. The stellar Q4 financial results can be attributed to strong performance in the investment banking division and global market divisions. Amid the milestones, the stock fell by more than 2.3%.
Stellar Financial Results
The investment bank reported earnings of $12.08 a share, nearly double earnings of $4.69 a share reported a year ago. Likewise, the bank topped analysts’ estimates of $7.47 a share. Total revenue was up by 18% to $11.74 billion against Street estimates of $9.99 a share.
The full year's revenue came in at $$44.64 billion compared to $11.74 billion reported a year ago. Full-year earnings more than doubled to $9.46 billion compared to $4.51 billion reported a year ago.
Earnings nearly tripling can be attributed to a 27% growth in investment banking revenues. Likewise, global market revenues were up 23% year-over-year. As Bank of America reported a 16% decline in net interest income Goldman Sachs reported a 32% increase in net interest income of $1.4 billion. Likewise, the provision for credit losses declined 13% to $293 million, attributed to a reduction in wholesale loans.
GS Resiliency
The solid financial results underscore Goldman Sachs's resiliency in navigating challenging macro environments owing to COVID-19 shocks. The investment bank was also able to achieve strong results across the franchise on advancing its strategic priorities. The stellar financial results come amid a challenging business environment in the banking sector, affected by record-low interest rates.
However, the financial behemoth has warned that 2021 may not bring the same trading opportunities that propelled it to top-line and bottom-line growth. With the pandemic taking a toll on the global economy, Goldman Sachs has warned that its consumer business could take much longer to break even.
Amid the warning, it is clear that Chief Executive Officer David Solomon's strategy is working. Likewise, investors have reacted by pushing the stock up depicted by a 30% plus gain in 2020