Echoing trends seen up and down Wall Street, fourth-quarter results from Goldman Sachs show huge gains in revenues tied to asset trading. But the results also underscored the continued push into consumer banking, and specifically online banking.
In terms of the top and bottom lines, the company reported numbers that far outpaced expectations. Earnings per share came in at $12.08, while consensus had been at $7.47. Revenues of $11.7 billion were higher than the roughly $10 billion that had been expected.
Drilling down, and in the echo of what’s been seen on the Street, revenues tied to equities trading grew by 40 percent year on year in the fourth quarter to $2.3 billion.
Supplemental materials released by the company show credit card loans stood at $4 billion, up from $3 billion in the third quarter, and $2 billion in the year-ago period. Installment loans were $4 billion, roughly flat with the third quarter of this year. The company said the consumer net charge-off rate of 4.2 percent was down 200 basis points year over year.
In details on Marcus, the company said deposits at the end of the most recent quarter were $97 billion, and Goldman is targeting at least $125 billion in deposits by 2024. Loans tied to its cards should reach at least $20 billion in 2024, as the bank noted in an update to its strategic plan.
Asked on the conference call with analysts about the roadmap for Marcus, and the competitive landscape, management stated that FinTechs such as Chime are relatively narrower in scope in their offerings than Goldman is; CEO David Solomon maintained that Goldman has a “more integrated offering” than competitors. Having a proprietary platform in place, along with Goldman’s history of strong corporate relationships, opens up the potential for partnerships in building out digital initiatives focused on the consumer.
“We continue to get feedback that the state-of-the-art product platform and the digital applications that we have are really excellent by any standards,” said Solomon during the call, adding, “we’re going to continue to move forward with that long-term strategy.”
As had been noted in this space late last year, Goldman Sachs has reportedly been testing a wealth management app for the masses. That effort, in beta testing, has been known as Marcus Invest, and Goldman has reportedly been eyeing a 2021 rollout.
Management said on the fourth-quarter earnings call that in the fourth quarter it took a provision for credit losses of about $293 million; embedded in that number is a release of about $200 million spurred by a better macro environment.