Goldman Sachs Reports Strong Financial Results for 2024

Goldman Sachs, one of the world’s leading financial institutions, has released its financial results for the year 2024, and the news is positive. The company generated net earnings of $14.28 billion, a significant increase from the $8.52 billion earned in 2023. Diluted earnings per share (EPS) also rose, reaching $40.54 compared to $22.87 the previous year.

The company’s return on equity (ROE), a key measure of profitability, was 12.7% in 2024, up from 7.5% in 2023. This means Goldman Sachs is generating more profit relative to the amount of shareholders’ equity invested in the business. The book value per common share, which represents the company’s net worth per share, increased by 7.4% to $336.77.

Revenues Grow Across Key Businesses The strong financial performance was driven by higher net revenues across Goldman Sachs’ three main business segments: Global Banking & Markets, Asset & Wealth Management, and Platform Solutions.

Net revenues, which include both operating income and net interest income, rose by 16% to $53.51 billion in 2024 compared to the previous year. This increase was primarily due to higher net revenues in Global Banking & Markets and Asset & Wealth Management.

In Global Banking & Markets, net revenues increased by 16% to $34.94 billion, reflecting significantly higher investment banking fees, particularly in debt and equity underwriting, as well as higher revenues in the FICC (Fixed Income, Currency and Commodities) and Equities businesses.

Asset & Wealth Management also saw a 16% increase in net revenues to $16.14 billion, driven by significantly higher net revenues from equity investments and higher management and other fees, which reflect the growth in assets under supervision.

While Platform Solutions net revenues were slightly higher at $2.43 billion, the business segment continued to face challenges, reporting a pre-tax loss of $1.08 billion. However, the company remains committed to achieving pre-tax breakeven for Platform Solutions by the end of 2025.

Provision for Credit Losses Rises, but Expenses Decline Provision for credit losses, which represents the amount set aside to cover potential loan defaults, increased to $1.35 billion in 2024 from $1.03 billion in 2023. This was primarily due to net provisions related to the credit card portfolio.

On the expense side, total operating expenses decreased by 2% to $33.77 billion. This was driven by significantly lower expenses related to commercial real estate in consolidated investment entities and other significant expenses recognized in the prior year, such as the write-down of intangible assets and an impairment of goodwill. These decreases were partially offset by higher compensation and benefits expenses, reflecting the improved operating performance.

The company’s efficiency ratio, which measures operating expenses as a percentage of total net revenues, improved to 63.1% in 2024 from 74.6% in 2023, indicating greater operational efficiency.

Strong Capital Position and Shareholder Returns Goldman Sachs maintained a strong capital position throughout the year. As of December 2024, the company’s Common Equity Tier 1 (CET1) capital ratio, a key measure of financial strength, was 15.0% under the Standardized Capital Rules and 15.3% under the Advanced Capital Rules.

During 2024, the company returned a total of $11.80 billion to common shareholders, including $8.00 billion in common share repurchases and $3.80 billion in common stock dividends.

Outlook and Challenges The operating environment in 2024 was characterized by continued broad macroeconomic concerns, including inflation, ongoing geopolitical tensions, and central bank policy. Despite these challenges, the U.S. economy remained resilient, and equity markets reacted favorably to the outcomes of national elections.

Looking ahead, Goldman Sachs expects uncertainty and concerns about geopolitical risks, central bank policy, and inflation to persist. If these conditions deteriorate further, it could lead to a decline in asset prices, a decrease in market-making activity levels, and a decline in industry-wide investment banking volumes, which would likely negatively impact the company’s net revenues and provision for credit losses.

The company also faces the challenge of narrowing its focus on consumer-related activities, as it plans to transition the GM credit card program to another issuer and sell its seller financing loan portfolio. The success of these strategic initiatives will be crucial for the future performance of the Platform Solutions business segment.

Overall, Goldman Sachs’ strong financial results in 2024 demonstrate the company’s ability to navigate a challenging operating environment and deliver value to its shareholders. The company’s diversified business model, focus on risk management, and commitment to capital discipline have positioned it well to weather any future economic and market uncertainties.