Press release·02/27/2025 21:28:19

Overview of Goldman Sachs’ Financial Performance

Goldman Sachs, a leading global financial institution, had a strong year in 2024, generating net earnings of $14.28 billion, up significantly from $8.52 billion in 2023. Diluted earnings per share (EPS) was $40.54, compared to $22.87 the prior year. The firm’s return on equity (ROE) was 12.7%, up from 7.5% in 2023.

The improvement in financial performance was driven by higher net revenues, which increased 16% to $53.51 billion. This was primarily due to strong results in the firm’s Global Banking & Markets and Asset & Wealth Management segments. Global Banking & Markets saw a 16% increase in net revenues, reflecting higher investment banking fees and stronger performance in equities and fixed income trading. Asset & Wealth Management also had a very strong year, with a 16% increase in net revenues driven by higher asset management fees and gains on equity investments.

While the firm’s operating expenses decreased 2% to $33.77 billion, the efficiency ratio (operating expenses divided by net revenues) improved significantly to 63.1% from 74.6% in 2023. This was due to lower expenses related to commercial real estate investments and other one-time charges in the prior year.

The firm returned a total of $11.80 billion of capital to common shareholders in 2024 through $8.00 billion in share repurchases and $3.80 billion in common stock dividends. As of the end of 2024, Goldman’s Common Equity Tier 1 (CET1) capital ratio, a key measure of the firm’s capital strength, was 15.0% under the Standardized Capital Rules and 15.3% under the Advanced Capital Rules.

Segment Performance

Global Banking & Markets Global Banking & Markets, the firm’s largest segment, generated $34.94 billion in net revenues, a 16% increase from 2023. This was driven by significantly higher investment banking fees, particularly in debt and equity underwriting, as well as stronger performance in equities and fixed income trading. Provision for credit losses in this segment decreased to $40 million from $401 million in the prior year.

Asset & Wealth Management Asset & Wealth Management reported net revenues of $16.14 billion, up 16% year-over-year. This was primarily due to higher asset management fees, reflecting an increase in assets under supervision (AUS), as well as significantly higher gains on the firm’s equity investments. Provision for credit losses in this segment was a net benefit of $232 million, compared to a net benefit of $508 million in 2023.

Platform Solutions Platform Solutions, which includes the firm’s consumer lending and transaction banking businesses, generated $2.43 billion in net revenues, a 2% increase from the prior year. This segment continued to face challenges, reporting a pre-tax loss of $1.08 billion, though this was an improvement from the $2.18 billion pre-tax loss in 2023. Provision for credit losses in this segment increased to $1.54 billion from $1.14 billion in the prior year.

Strengths and Weaknesses

Strengths:

• Diversified business model with strong performance across Global Banking & Markets and Asset & Wealth Management
• Robust capital and liquidity position, with CET1 ratio well above regulatory requirements
• Ability to generate significant capital returns to shareholders through dividends and share repurchases

Weaknesses:

• Continued challenges and losses in the Platform Solutions segment, which the firm is working to address
• Reliance on trading revenues, which can be volatile and subject to market conditions
• Potential regulatory risks and uncertainties, such as the impact of new global tax rules

Outlook and Future Prospects

Looking ahead, Goldman Sachs is well-positioned to navigate the current economic environment, which remains uncertain due to concerns about inflation, geopolitical tensions, and central bank policy. The firm’s diversified business model, strong capital position, and focus on risk management should allow it to weather any potential market volatility.

In the Global Banking & Markets segment, the firm expects investment banking activity to remain robust, though it may be impacted by any slowdown in the broader economy. The Asset & Wealth Management segment should continue to benefit from strong inflows and market appreciation, though the firm will need to monitor the impact of any economic downturn on asset prices.

The firm’s strategic decision to narrow its focus on consumer-related activities in the Platform Solutions segment is a prudent move, as this business has struggled to achieve profitability. The firm is targeting pre-tax breakeven for this segment by the end of 2025, which would be a significant improvement.

Overall, Goldman Sachs’ strong performance in 2024, coupled with its solid capital position and risk management practices, position the firm well for the future. However, the firm will need to continue to adapt to changing market conditions and regulatory requirements to maintain its competitive edge.