Updated at 9:50 a.m. EST.
Goldman Sachs (GS) – Get the report from Goldman Sachs Group, Inc. on Tuesday posted weaker-than-expected fourth-quarter results as the bank trailed rivals with strong investment banking earnings, but noted a slump in its global capital markets division.
Goldman said earnings for the three months ending December were pegged at $10.81 per share, down 10.5% from the same period last year and well below consensus forecasts for Street of $11.76 per share. The group’s revenue, Goldman said, rose 7.7% to $12.64 billion, beating analysts’ forecasts of a total of $12.08 billion.
Investment banking revenue rose 45% from a year ago to $3.8 billion, Goldman said, while overall global markets revenue fell 7% to 3.99 billions of dollars.
“2021 has been a banner year for Goldman Sachs. The extraordinary performance of the business is a testament to the strength of our customers and our people,” CEO David Solomon said, referring in part to a rate of return on equity. 23%, the highest since 2007. “Looking forward, our management team remains committed to growing Goldman Sachs, diversifying our business and creating strong returns for shareholders.”
Goldman Sachs shares fell 8.45% in Tuesday morning trading immediately after the earnings release, the biggest one-day drop since June 2020, to change hands at $348.80 apiece.
Last week, JPMorgan Chase (JPM) – Get the JPMorgan Chase & Co. report. posted a higher-than-expected fourth-quarter profit of $10.4 billion, thanks in part to strong gains in investment banking fees and the release of reserves set aside during the peak of the Covid pandemic, but said net interest income, a key measure of profitability, of around $50 billion, down from the 2021 tally of around $52.5 billion and well below forecasts of Street.
Global merger deals topped $5 trillion for the first time this year, an all-time high fueled in part by SPAC deals, cheap capital and major corporate restructurings.
Dealogic, which compiles mergers and acquisitions data, said global deal value rose 63% from a year ago to $5.63 trillion, a new all-time high that eclipsed the record. of 2007 of $4.42 trillion.
Plans unveiled by General Electric (GE) – Get the General Electric company report and Johnson & Johnson (JNJ) – Get the Johnson & Johnson report to spin off their businesses played a big role in this year’s record total, as did the increase in deals struck with the so-called Special Purpose Acquisition Companies, or SPACs, led by the $4.5 billion merger. from Singapore-based Grab earlier this month.