“We have a much stronger platform for 2024,” David Solomon said Tuesday, in remarks accompanying Goldman’s Q4 results.
That’s good to hear if you’re a shareholder. 2023, which Solomon euphemistically described as “a year of execution,” was touch and go. Goldman was, of course, compelled to abandon Solomon’s consumer banking fever dream and he struggled at times to placate critics.
The firm mostly completed work on its “strategic priorities” last quarter, when Solomon recorded another sizable EPS hit from “selected items,” including the sale of an installment lender the bank bought in 2021 and losses in AWM principal investments, mostly from real estate.
This quarter, “selected items” had an earnings impact of $0.83. For context, that impact was $2.41 in Q3 and $3.95 in Q2. Goldman also had to absorb its share ($529 million) of the FDIC special assessment in Q4 — i.e., the cost of bailing out uninsured depositors during March’s regional banking drama.
Overall, Goldman’s Q4 results were… let’s call them ok-ish. Most notably, the firm’s equities traders performed well, consistent with a high-profile Bloomberg piece published earlier this month declaring an equities renaissance at Goldman. Specifically, equities revenue in Q4 was $2.61 billion, an easy beat, and revenue for the full year was $11.55 billion, up 5%.
Morgan Stanley, which also reported on Tuesday, said equities revenue was $2.2 billion last quarter, short of estimates. For all of 2023, Morgan Stanley’s equities business brought in $9.99 billion, down 7%.
Between them, Goldman, Morgan Stanley and the house of Dimon control nearly half the global market. As of now, Goldman’s king again. As the figure above shows, the firm was the only bank among the top three to post a YoY increase in revenue from its equities franchise.
Goldman missed in FICC, though. Revenue there was just $2.03 billion, more than $500 million short of consensus.
Morgan Stanley missed too. FICC revenue of $1.43 billion was just below the $1.47 billion the Street wanted.
Citi needn’t feel so bad now about the worst quarter for fixed-income in half a decade. Goldman’s $2 billion in FICC revenue represented a 24% YoY decline, on par with the drop at Citi. Only JPMorgan managed to post a YoY gain in FICC sales and trading for Q4.
In IB, Goldman’s $1.65 billion in Q4 revenue was a slight miss, and Morgan Stanley’s $1.32 billion a decent beat. It’s been the same set of questions for (at least) three quarters: Is deal-making dead? When’s ECM coming back? And so on. (“No.” “Soon.” Etc.)
Notably, Morgan posted a nice beat in wealth management.
Revenue there was $6.65 billion (against $6.4 billion expected), and continues to loiter near record highs.
Both firms beat on the top-line. Net revenue at Goldman for Q4 was $11.32 billion versus $10.84 billion expected. At Morgan, revenue for the quarter was $12.9 billion against estimates for $12.75 billion.
Solomon on Tuesday said his pursuit in 2023 of the bank’s strategic objectives was indicative of a “relentless commitment” to excellence in client service. (If you’re going to roll your eyes, direct it at “D-Sol,” not me. I’m just quoting from the press release. Don’t shoot the messenger.)
Ted Pick, in his first quarterly update at the helm for Morgan Stanley, said the firm started 2024 “with a clear and consistent business strategy and a unified leadership team.”
And with that, big bank earnings in the US are (mercifully) over.
