Wall Street may be focused on trading revenues and rising compensation costs, but digging deeper into Goldman Sachs’ latest results show continued traction within its digital and consumer banking efforts.
At a high level, the company’s latest results fell below Street consensus estimates, due in part to higher operating expenses. The company earned $10.81 per common share, and analyst estimates had pegged that line item at $11.76.
Consolidated revenues were 8% higher year on year to $12.6 billion, which was about half a billion dollars higher than consensus (investment banking revenues surged by 45%).
Revenues from the company’s consumer banking division, which houses the company’s recent launches into credit cards, showed an 8% gain, year over year, to $375 million, logging 23% growth for the entire year to $1.5 billion.
Supplemental materials released by the company in tandem with earnings show that installment loans in the latest quarter stood at $4 billion, up from $3 billion in the third quarter of this past year. Credit card loans in the most recent period were $8 billion, doubling from a year ago.
Total consumer and wealth management assets under supervision, which includes Marcus, across the company, were $751 billion in the fourth quarter, up from $615 billion a year ago. Total net revenues from the consumer and wealth management segment overall came in at $1.9 billion, gaining 19% year over year.
In reference to credit quality, the company said that its consumer charge off rates were 2.3%, down 190 basis points year over year.
Consumer Banking Details
CEO David Solomon said on the conference call with analysts, “I continue to be excited by our creation of the consumer banking platform of the future. We are enabling over 10 million customers to take control of their financial lives.”
Part of the strategy, he said on the call, rests with diversification into new products and services.
As an example, he pointed to the recent introduction of the GM rewards card.
As noted in this space last week, the collaboration and launch with GM would be the second co-branded card launched by the Wall Street giant, on the heels of its partnership with Apple.
The bank will take over the card business from Capital One Financial, which has been offloading some smaller portfolios — and while the transaction for Goldman is a moderate one, it does see the bank getting more into retail banking. The deal involves about 3 million existing GM credit card holders, whose accounts were converted to Goldman this month.
Read more: Marcus My GM Rewards Card Turns Points Into Car Discounts
CFO Denis Coleman said that on the call that the 10 million customers in consumer banking reflects growth of about 60% year on year, adding that gross loan balances were up by 50%.
During the question and answer session with analysts, management was asked about the September 2021 Goldman struck to buy FinTech lending company GreenSky. CEO Solomon said, “What was interesting about GreenSky to us was the merchant network. We were thinking about how we were going to build a merchant network, and we thought it would take a very long time. And this allowed us to acquire a merchant network.”
Also read: Goldman Sachs to Buy FinTech Lender GreenSky in $2.24B All-Stock Deal
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