Goldman Sachs beats analysts’ estimates on stronger-than-expected inventory buying and selling and funding banking

David Solomon, Chairman of the Board of Directors of Goldman Sachs & Co., speaks during an interview with Bloomberg Television at the Milken Institute Global Conference in Beverly Hills, California, USA, on Monday April 29, 2019.

Patrick T. Fallon | Bloomberg | Getty Images

Goldman Sachs exceeded analyst expectations for fourth quarter earnings and sales on Tuesday due to the strong performance of the company’s stock traders and investment bankers.

The bank posted earnings of $ 12.08 per share, defeating the estimate of $ 7.47 per share by analysts surveyed by Refinitiv. Sales of $ 11.74 billion exceeded estimate by approximately $ 1.75 billion.

The expectations of Goldman CEO David Solomon were high. Last week, JPMorgan Chase posted record trading and advisory results in the fourth quarter that helped the bank beat earnings estimates.

Of the six largest US banks, Goldman generates most of its revenue from Wall Street activities, including trading and investment banking. This has been a disadvantage for the company in recent years as retail banking has driven the industry’s record profits.

For the final quarter of the year hit by the coronavirus pandemic, Goldman’s model could prove to be an asset. Companies with large consumer credit businesses have been forced to set aside tens of billions of billions of acidic loan reserves.

However, thanks to unprecedented actions by the Federal Reserve earlier in the year, wide open markets should help usher in the best year for Wall Street trading since the financial crisis. Meanwhile, investment bankers are benefiting from increasing demand for IPOs and a record rate of debt issuance.

Goldman shares rose 11% in 2020, outperforming the KBW Bank Index’s 4.3% decline.

Here are the numbers:

Earnings: $ 12.08 per share versus $ 7.47 per share, according to Refinitiv.
Revenue: $ 11.74 billion versus $ 9.9 billion.

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