Goldman Sachs’ profits rose in the quarter, as did the investment bank, trading fuel hedges.
(Reuters) – Goldman Sachs profit more than doubled in the fourth quarter, led by banks that brought in extra charges from contractors, debt sales and strength in business, sending shares up 3% before the bell.
Profit rose to $4.11 billion, or $11.95 per diluted share, for the three months ended Dec. 31, down from $2.01 billion, or $5.48 per diluted share, a year earlier, the Wall Street giant said on Wednesday.
It was the bank’s highest quarterly profit since the third quarter of 2021, data compiled by LSEG showed.
Banking industry executives expect strong trading activity this year as the U.S. Federal Reserve cuts interest rates and President-elect Donald Trump’s trade comments drive optimism among investors.
“We are very pleased with our strong results for the quarter and for the year,” CEO David Solomon said in a statement. “I am encouraged that we have achieved almost all of the targets we set out in our strategy to grow the company five years ago.”
Goldman’s investment banking fees rose 24 percent to $2.05 billion in the fourth quarter, boosted by strong sales of financial and corporate bonds.
An industry-wide recovery, along with renewed activity in mergers and debt markets, boosted earnings for Wall Street’s top banks in the second half of 2024.
Total investment banking revenue will increase 26 percent to $86.8 billion in 2024, with North America up 33 percent from a year ago, according to data from Dealogic. Goldman has the second highest revenue among banks worldwide.
Last month, Solomon said at a Reuters conference that deals in stocks and mergers and acquisitions could exceed the 10-year average by 2025.
Revenue at Goldman’s global banking and markets division rose 33 percent to $8.48 billion in the fourth quarter.
The bank’s equity traders continued to ride a broader stock market rally in the final three months of 2024, with revenue rising 32 percent to $3.45 billion.
Stocks in the US hit record highs, buoyed by optimism over the new administration’s economic policies and low interest rates.
Fixed Income, Currencies and Commodities (FICC) trading shined with a 35% jump in revenue.
Goldman announced major management changes on Monday, creating a new division focused on financing large deals and lending to corporate clients to tap into the lucrative personal loan market.
Meanwhile, the Wall Street giant is slowing consumer activity after losing billions of dollars. Solomon, who once championed the retail push, has been critical of the strategy.