Goldman Sachs almost doubles profits, but reports drop in net earnings for 2023 financial results

Goldman Sachs reported a significant drop in its net earnings for 2023, down from $11.26 billion YoY in 2022 to $8.52 billion year-on-year on January 16th 2024.

However, its quarterly earnings were up significantly, from $1.33 billion in net earnings in Q4 2022 to $2.01 billion in Q4 2023 - almost doubling the company's profits.

Earnings per share

The financial services giant’s EPS was $5.48 of diluted earnings per common share in Q4 2023, up marginally from $5.47 in Q3, and significantly above market expectations of $3.51 per share.

Overall, Goldman Sachs in 2023 paid out $22.87 in earnings per share, down substantially compared with 2022’s total of $30.06.   

Annualised ROE (return on average common shareholders’ equity) was at 7.5 percent, broadly in line with expectations of 7.5 percent, the company said in a statement. Previously, ROE was at 7.1 percent for Q3 2023, and 7.6 percent for the 2023 year to date (YTD).

Revenue and expenses

Overall, Goldman Sach’s revenue increased to $46.25 billion YoY and $11.32 billion QoQ, ahead of industry forecasts estimating it to be under $11 billion at around $10.8 billion. Previously, the company’s net revenues were at $34.94 billion YTD in Q3 of 2023.

Operating expenses were $34.49 billion for 2023, 11% higher than 2022. Quarterly, they were five percent higher than Q4 2022. This was reportedly due to significantly higher impairments related to consolidated real estate investments for the company. This meant that Goldman Sach’s ratio of compensation and benefits to net revenues and net of provision for credit losses, was 34.5 percent, compared to Q3’s ratio of 34.5 percent.

The shares of the company were trading at $377.75 at markets opening on Tuesday.

Goldman Sachs to get more creative?

Private equity stalwarts may have a harder time making profits in years to come than they have in the recent past, according to Goldman Sach’s Marc Nachmann in a recent interview with the Financial Times.

This means that we may see more innovation and creative, less expected strategies going forward. Either way, Goldman Sachs is certainly one to watch.