Wall Street giant Goldman Sachs reported its lowest annual profit since 2019, due to a failed expansion into consumer banking and losses from the economic slowdown that hit its core business last year. , the Wall Street giant announced Tuesday.
Goldman Chief Executive David Solomon told analysts the move hurt earnings even as the bank reported fourth-quarter profit that beat analysts' expectations. .
The bank reported net income of $8.5 billion in 2023, down 24% from 2022 and the bank's lowest level in four years.
Profits for the quarter ended December last year rose 51% from a year earlier to $2.01 billion. Goldman's quarterly revenue rose 7% from a year earlier to $11.32, beating analysts' estimates of $10.8 billion.
The better-than-expected quarter came after eight consecutive quarters of declining profits amid a significant retreat from the company's retail banking business.
Goldman had spent the past few years trying to strengthen its consumer business, but was forced to largely scrap those efforts and sell part of its consumer lending business.
One bright spot was the bank's wealth and asset management division, a group Goldman is focused on strengthening, where revenue rose 23%.
Goldman's stock price rose nearly 2% to more than $384 per share.
Solomon acknowledged in a post-earnings conference call that the bank faced challenges in 2023, but said the company was poised for an even better year ahead.
“This has been a year of execution for Goldman Sachs,” Solomon said in a statement. “Everything we achieved in 2023 and a clear, simplified strategy gives us a stronger platform for 2024.”
Mr. Solomon defended the company's disappointing annual results.
“I don't think it's fair to say the whole year was back to 2019 levels,” Solomon, who replaced Lloyd Blankfein in 2018, told analysts.
Goldman Chief Financial Officer Dennis Coleman also offered a rosy outlook for the year ahead, saying just two weeks into the year, market activity already appears to be more robust. .
The bank cut thousands of jobs last year, reducing payroll costs by 7%.
Goldman, like many of its peers, had to set aside money in Federal Deposit Insurance Corporation fees to replenish funds used to bail out depositors after bank failures. That money needed to be recovered after it was withdrawn following the failures of Silicon Valley Bank and Signature Bank.
