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Goldman Sachs earned nearly $ 4 billion, but it was not good enough

The investment banking powerhouse said on Tuesday it earned $ 3.9 billion in the fourth quarter, or $ 10.81 per share. But analysts had forecast a profit of $ 4.1 billion, or $ 11.70 per share. Shares of Goldman Sachs fell nearly 8% on the news.

Goldman Sachs (GS), like many of its rivals, benefited from a boom in trading activity, and as companies appeared to be listed or making acquisitions last year. Investment banking revenue increased by 58% from a year ago in 2021.

Goldman Sachs said fourth-quarter total revenue came in at $ 12.6 billion, topping forecasts and rising 8% from a year ago.

The company has also stepped up its efforts to appeal to consumers and not just businesses, Goldman Sachs' consumer and wealth management business, which includes the company's Marcus online banking unit, had record revenue last year.

For the full year, Goldman Sachs generated revenue of more than $ 59 billion and net income of $ 21.6 billion.

Dow falls as major banks are hit

"2021 was a record year for Goldman Sachs. The company's exceptional performance is a testament to the strength of our customer franchise and people," Goldman Sachs CEO David Solomon said in a statement. "Going forward, our management team remains committed to growing Goldman Sachs, diversifying our business and delivering strong returns to shareholders."

Solomon also warned investors at the company's conference call with analysts that inflation caused by rising wages and supply chain disruptions linked to the outbreak of the Omicron variant of Covid-19 is likely to continue for some time.

"It is no surprise that the recent rise in cases is putting even more pressure on supply chains. Inflation continues in many countries and major central banks have begun to raise interest rates," Solomon said.

He added, "Inflation may be above trend for some time. And in the short term, inflationary pressures may continue to intensify before it starts to fall. I also think we could see more volatility as these easing policies are phased out."

Still, Solomon expressed hope that the global economy will soon be past the worst Covid-19 pandemic. Goldman Sachs, like most other Wall Street companies, has postponed plans to have many of its employees return to Manhattan headquarters.

"My view is that Covid-19 will be endemic and as a society we will find a way to live with it, supported by the effectiveness of vaccines and new treatments," he said, adding that Goldman Sachs will have to to be "flexible" and dynamic with our protocols to adapt to this new state of the world while enabling the majority of our people to be back in the office safely. "

Goldman Sachs had a lot of hype to live up to in its earnings report. Shares rose 45% in 2021, making Goldman Sachs the third-best performer in the Dow index, just behind Home depot (HD) and Microsoft (MSFT).
Shares of Goldman Sachs fell Friday, a day where JPMorgan Chase (JPM) and Citigroup (C) both reported earnings that were also not strong enough to satisfy investors.

However, Goldman Sachs employees benefited from the solid 2021 results. The company said Tuesday it set aside $ 17.7 billion in compensation and benefits for its employees last year, an increase of 33% from 2020. That equates to an average of nearly $ 404,000 for the company's 43,900 employees.

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