Goldman Sachs -24%, Morgan Stanley -18%
Leading U.S. investment banks Goldman Sachs and Morgan Stanley both recorded their lowest annual profits in four years. This was due to a decline in trading and initial public offering (IPO) markets last year, which reduced fee income.
According to major foreign media reports on the 16th (local time), Goldman Sachs posted a net profit of $8.5 billion (approximately 11.39 trillion KRW) last year. This represents a 24% decrease compared to the previous year. The impact of losses incurred from withdrawing from the retail finance sector, including the sale of fintech (finance + technology) lending platform GreenSky, was significant.
Morgan Stanley recorded a net profit of $9.1 billion (approximately 12.194 trillion KRW) last year, down 18% from the previous year. Profits from investment banking and trading divisions fell by about one-third.
Looking at the fourth-quarter results alone, Goldman Sachs and Morgan Stanley showed contrasting performances. Although Goldman Sachs had a weak annual performance, it exceeded analysts' expectations in the fourth quarter. Asset management and equity trading businesses drove growth in the fourth quarter, generating a net profit of $2 billion (approximately 2.6796 trillion KRW). This was a 51% increase compared to the same period last year and significantly surpassed Bloomberg's surveyed quarterly net profit estimate of $1.5 billion (approximately 2.0097 trillion KRW).
Morgan Stanley posted a net profit of $1.5 billion in the fourth quarter last year. This was about a 32% decrease compared to $2.2 billion (approximately 2.9489 trillion KRW) in the same period the previous year. The decline is attributed to weakness in its core asset management business and the impact of one-time expenses.
Despite last year's poor results, Goldman Sachs and Morgan Stanley have a positive outlook for this year's performance.
David Solomon, CEO of Goldman Sachs, said, "The possibility of interest rate cuts in the first half of this year is rekindling optimism about a soft landing," adding, "Goldman Sachs is witnessing signs of a potential revival in strategic activities reflected in the backlog of unfilled orders."
Goldman Sachs announced that it has exceeded its fundraising target of $225 billion (approximately 301.3455 trillion KRW) in core strategic businesses such as private equity (PEF), private credit, and real estate. Initially, it had planned to reach this amount by the end of this year but has raised its target to $251 billion (approximately 336.2898 trillion KRW) by year-end.
Ted Pick, CEO of Morgan Stanley, pointed out significant risks from geopolitical tensions and the direction of the U.S. economy but stated, "We are confidently starting 2024." He added, "Based on evidence such as building M&A and IPO pipelines, improving boardroom confidence, and positive sentiment among retail and institutional clients, we expect to maintain a constructive stance going forward."
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