Earnings

Goldman’s Marcus Logs $35B In Deposits In 2018

Goldman Sachs

Goldman Sachs saw its latest quarterly results beat Street estimates, helped by a combination of investment banking-related activity – but also by strength in its lending activities, which included Marcus, the online lending and high-yield savings account operation launched a few years ago.

In terms of headline numbers, net income on an adjusted basis came in at $4.83 a share for the quarter, leagues above the $4.45 expected, and revenues were $8.08 billion, above the $7.6 billion expected. Investment banking was $2 billion, as advisory services gained 56 percent to $1.2 billion, where the company advised on several deals.

But it was the investment and lending segment that helped the company move past Street projections, and where that operation includes the consumer banking activities mentioned above. Sites such as CNBC noted that the $1.9 billion in sales here was as much as $550 million above what had been estimated. Net interest income here, said management, was “significantly higher.”

All told, Marcus took in $35 billion in deposits spanning the U.K. and the U.S. through the past year, said management. And shedding some light on the U.K., where Marcus launched in October of last year and where more than 100,000 customers have signed on, the tally stood at roughly $5 billion.

During the conference call with analysts, CFO Stephen Scherr said that demand was more than the company had anticipated. The company had been paying rates that were higher than what the executive termed the “high-street banks” in the U.K., but as deposits have gathered momentum, Goldman has some “maneuverability” on the rates. As has been reported previously and earlier this month, Goldman has said that it would pay online savings customers 2.25 percent – a rate that went into effect in January – a boost of 20 basis points.

The $35 billion in Marcus deposits comes after reports that the company had seen $27 billion in deposits as recently as November and with more than two million customers, according to CNBC.

The firm also said that provisions related to legal activities grew to $516 million – tied in part to the ongoing 1MDB matter, where late last year a Goldman banker pleaded guilty to helping a Malaysian individual, Jho Low, embezzle billions of dollars from an investment fund. Newly installed CEO David Solomon, who took the role previously held by Lloyd Blankfein until the fall of 2018, said the firm would work through any “reputational dent.”

The renewed focus on consumer activities comes as the firm is in the midst of a “front to back” review of operations with an eye on cost-cutting.

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