Goldman Sachs’ profits fell by two-thirds in its most recent quarter, falling short of expectations and capping a dismal year that has forced the bank into its biggest cost cut since the financial crisis.
It was the Wall Street Bank’s fifth straight quarter of falling profits, and Goldman has already cut more than 3,000 jobs, cut bonuses and launched a major spending review.
The fall in fourth-quarter profit was due to a sharp slowdown in investment banking activity as higher interest rates and a slowing global economy ended a multi-year dealmaking boom.
Goldman said on Tuesday that fourth-quarter net income fell to $1.3 billion, below analysts’ expectations of $2.2 billion and below the $3.9 billion for the same period in September previous year.
Goldman shares fell nearly 4 percent in early New York trade.
A 48 percent decline in investment banking revenues to $1.9 billion for the quarter reflected declines reported last week by JPMorgan Chase, Bank of America and Citigroup. The weakness in investment banking overshadowed a better-than-expected performance from the bank’s traders.
The bank’s newly formed Consumer Financial Technology unit also made gains last quarter, with the unit falling to a $778 million pre-tax loss. This was mainly due to provisions that Goldman made to cover potential loan losses.
Revenue from trading in fixed income, currencies and commodities was $2.7 billion in the fourth quarter, beating analysts’ estimate of $2.4 billion, while revenue from equities came in at $2.1 billion matched the forecasts.
UBS analysts said without Goldman providing more information on severance costs and restructuring costs stemming from its cost-cutting program, the extent of the earnings shortfall is difficult to gauge.
Despite declines from a record 2021, Goldman’s full-year net income was $11.3 billion, its second-best performance since 2009, according to Bloomberg data.
Goldman’s average tangible equity for the quarter was 4.8 percent, well short of the 15 to 17 percent target the bank announced in February. For the full year, the return on tangible equity was 11 percent.