Goldman Sachs CEO David Solomon blamed “challenging” economic conditions on Tuesday as the bank reported a worse-than-expected profit plunge in the fourth quarter.
The Wall Street titan reported its profits fell 66% to $1.33 billion, or $3.32 per share, falling well short of Wall Street’s expectations.
Revenue from the investment banking division dropped 48% to $1.9 billion during an ongoing dealmaking slump that has hammered many firms in the sector.
Higher costs exacerbated the rough quarter at Goldman, with operating expenses spiking 11% to $8.09 billion compared to the same quarter one year ago. Goldman pinned the sharp uptick on “higher compensation and benefits expenses,” which rose 16% to 3.8 billion.
“Against a challenging economic backdrop, we delivered double-digit returns for our shareholders in 2022,” Solomon said in a statement. ‘Our clear, near-term focus is realizing the benefits of our strategic realignment which will strengthen our core businesses, scale our growth platforms and improve efficiency.”
Shares of Goldman Sachs were down nearly 3% in premarket trading after the earnings miss. The subpar quarterly report came one week after Goldman announced a wave of layoffs as part of belt-tightening measures aimed at shoring up its financial position.
As The Post reported, Goldman laid off 3,200 workers on what was known internally as “David’s Demolition Day” – with hundreds more expected to head for the exits due to “skimpy” bonuses.
Overall, quarterly revenue fell 16% to $10.59 billion in the fourth quarter. Analysts had expected fourth-quarter revenue of $10.83 billion.
“Widely expected to be awful, Goldman Sachs’s Q4 results were even more miserable than anticipated,” Octavio Marenzi, the chief executive officer of Opimas, said in a note on the results, according to Bloomberg.
“The real problem lies in the fact that operating expenses shot up 11%, while revenues tumbled,” Marenzi added. “This strongly suggests more cost cutting and layoffs are going to come.”
Goldman chief administration officer Ericka Leslie is reportedly leading a cost review at the bank. The effort has included an analysis of the cost of private jet trips by Solomon and other top executives on company-owned plans, among other areas of potential excess weighing on the bank’s bottom line.
[Written in collaboration with other media outlets with information from the following sources]
