Goldman Sachs and Morgan Stanley earning reports, highlights 📌

Goldman Sachs (GS.US) and Morgan Stanley (MS.US), which largely derive their profits from investment activities, are trading up a modest 1.7% today in pre-opening trade. Both investment banks performed moderately well.

Goldman Sachs (GS.US)

Goldman Sachs reported Fixed Income, Currencies, and Commodities (FICC) sales and trading revenues for Q4 2023, which were lower than analysts' estimates. However, net income and earnings per share significantly beat Wall Street expectations. The bank earned a net $1.87 billion compared to $1.19 billion in Q4 2022. In the investment bank, revenues from global banking decreased, while the profitability of the wealth management segment increased. The bank's CEO, David Salomon, emphasized that in 2023 the bank executed its strategy.

• Revenues: $11.32 billion vs. $10.84 billion forecasts and $10.59 billion in Q4 2022.
  • FICC Sales and Trading: $2.03 billion vs. $2.58 billion forecasts (a 24% year-over-year decrease).
  • Global Banking and Markets: $6.35 billion vs. $6.47 billion forecasts (a 2.5% year-over-year decrease).
  • Investment Banking: $1.65 billion vs. $1.68 billion forecasts (a 12% year-over-year decrease).
  • Equity Sales and Trading: $2.61 billion vs. $2.25 billion forecasts (a 26% year-over-year increase, indirectly resulting from a very weak Q4 for equities in 2022).
  • Advisory: $1.01 billion vs. $902.3 million forecasts (a 29% year-over-year decrease).
  • Equity Underwriting: $252 million vs. $335.4 million forecasts (a 38% year-over-year increase).
• Earnings Per Share (EPS): $5.48 vs. $3.61 forecasts and $3.32 in Q4 2022.
• Assets Under Management (AUM): $2.81 trillion vs. $2.77 trillion forecasts (10% year-over-year increase).
• CET1 Ratio: 14.5% compared to the estimated 14.8%.
• Interest Income: $1.34 billion vs. $1.73 billion forecasts (a 35% year-over-year decrease).
• Deposits: $428 billion (a 6.2% quarter-over-quarter increase).
• Return on Equity: 7.6% compared to 5.56% expectations.

source: xStation 5

Morgan Stanley (MS.US)

Morgan Stanley's fourth-quarter results showed a modest increase in net revenue and wealth management net revenue, exceeding analyst estimates. However, there were mixed results in other areas, such as equities sales & trading and advisory revenues, with some figures surpassing and others falling short of expectations. The company's EPS showed a decrease from the previous year, and several key metrics like return on equity and wealth management pretax margin were lower than estimated. Despite these variances, assets under management and fee-based asset flows were notably higher than anticipated.

Financial Highlights:

• Net Revenue: $12.90 billion, a 1.2% increase year-over-year (y/y), surpassing the estimate of $12.75 billion.
  • Wealth Management: $6.65 billion, a slight increase of 0.3% y/y, exceeding the estimate of $6.4 billion
  • Equities Sales & Trading: $2.20 billion, up 1.2% y/y, but below the estimated $2.26 billion
  • FICC Sales & Trading: $1.43 billion, slightly below the estimate of $1.47 billion
  • Institutional Investment Banking: $1.32 billion, significantly higher than the estimated $1.12 billion.
  • Advisory: $702 million, well above the estimate of $534.8 million.
  • Equity Underwriting: $225 million, below the estimated $269.1 million.
  • Fixed Income Underwriting: $391 million, exceeding the estimate of $318.8 million.
• Earnings Per Share (EPS): 85 cents, a decrease from $1.26 y/y.
• Total Deposits: $351.80 billion, a 1.8% increase quarter-over-quarter (q/q), above the estimate of $343.94 billion.
• Net Interest Income: $1.90 billion, slightly below the estimate of $1.94 billion.
• ROI: 6.2%, below the estimated 7.77%.
• Standardized CET1 Ratio: 15.2%, slightly below the estimated 15.4%.

source: xStation 5