While the bank’s FICC sales and trading revenue of $1.86 billion was higher than the average analyst forecast of $1.80, equity sales and trading revenue missed expectations, coming in at $2.12 billion versus the $2.47 billion seen by analysts, resulting in a miss in overall trading rev. of $3.99 billion, which came in below the estimate $4.27 billion. According to Goldman, the reason for the miss is that “Equities net revenues were lower, reflecting significantly lower intermediation net revenues, partially offset by significantly higher financing net revenues.” Furthermore, the “4Q 21 operating environment was characterized by challenging market-making conditions compared with 3Q 21, although activity levels remained solid, equity prices were generally higher and volatility increased.”
On the other hand, and similar to JPM, investment banking revenue of $3.60 billion came in well above expectations $3.07 billion.
And perhaps more concerning is that just like JPMorgan, Goldman’s compensation expenses came in red hot, at $3.25 billion, well above the estimate $2.89 billion.
“This is a disappointing quarter due to the big jump in expenses and the softness in equities,” writes Vital Knowledge founder Adam Crisafulli. “It also looks like their portfolio of equity investments was hurt by turbulent capital markets in Q4,” he added.
The stock is sharply lower premarket on the disappointing earnings.
The full Goldman investor presentation can be found here.
Tue, 01/18/2022 – 07:51
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Author: Tyler Durden