Goldman Sachs dwarfed Wall Street estimates as its fourth-quarter profit more than doubled, powered by another blowout performance at its trading business and a surge in fees from underwriting a series of blockbuster IPOs.
Revenue from global markets, which houses the bank’s trading business, registered its best annual performance in a decade as investors churned their portfolios at the end of a roller-coaster year for financial markets amid the Covid-19 pandemic.
Trading, Goldman’s main revenue-generating engine, surged 43% annually. Equities trading and investment banking revenues both comfortably beat forecasts, Oppenheimer analyst Chris Kotowski said.
“It was an exceptionally strong quarter,” he said. Total revenue climbed 18% to $11.74bn.
Goldman’s latest performance was all the more impressive, as it comfortably absorbed a $3bn hit to its annual profits, after reaching a settlement with the US Department of Justice and other US and overseas regulators over its role in Malaysia’s 1MDB corruption scandal.
Meanwhile, Bank of America executives said they were optimistic the bank could return to loan growth this year after the coronavirus pandemic caused its loan book to shrink on an annual basis for the first time since 2014.