The shares of Goldman Sachs Group Inc (NYSE: GS) tumbled 6.97% or $26.54 to close at $354.40 yesterday following the release of mixed fourth-quarter 2021 results. While the revenues surpassed forecasts, earnings missed estimates. Furthermore, the earnings fell 13% on a y-o-y basis, mirroring an increase in operating expenses and an increase in provision for credit losses.
The financial institution based in New York, reported fourth-quarter revenues of $12.639 billion, an increase of 8% from $11.741 billion in the comparable quarter last year. The reported revenues include considerably high net revenues from Investment Banking and Consumer & Wealth Management divisions, partly negated by lower net revenues from Global Markets and Asset Management segments.
The quarter ended December 31, 2021 revealed that Goldman Sachs posted net earnings of $3.809 billion, or $10.81 per share, compared with $4.362 billion, or $12.08 a share in the quarter ended December 31, 2020. Analysts surveyed by Refinitiv had anticipated the banking behemoth to report earnings of $11.76 per share on revenues of $12.08 billion.
Segment-wise:
- Investment Banking income soared 48% year-over-year to $3.80 billion and eclipsed analysts’ estimates by roughly $550 million.
- Global Markets revenues were $3.985 billion, down 7% from last year. Specifically, fixed income revenues dropped 1% to $1.863 billion. Equities revenues decreased 11% to $2.122 billion.
- Asset management income fell by 10% y-o-y to $2.891 billion.
- Consumer wealth management revenues were $1.967 billion, an increase of 19% from the prior-year period.
During 4Q 2021, the bank recorded $344 million as a provision for credit losses, compared with $293 million in 4Q 2020.
The bank reported operating expenses of $7.27 billion for the recent quarter, an increase of 23% from the past year. The reported figure was higher than the $6.77 billion predicted by analysts polled by FactSet. The increase was due to a rise in compensation and benefits expenses, provisions for litigation and other regulatory proceedings ($182 million), and professional fees. Furthermore, transaction, technology, and marketing expenses were also higher.
Notably, on January 14, the company’s Board declared a dividend of $2 per share, payable on March 30, 2022.
The mixed quarterly results are predicted to keep the stock of Goldman Sachs bearish in the short term.
The historical price chart shows that the stock of Goldman Sachs has closed below its 50-day moving average. Additionally, the Chaikin money flow indicator also has a negative reading. We are therefore expecting the stock to stay in a downtrend in the days ahead.
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