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GOLDMAN SACHS GROUP INC (GS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was a decisive step-up: net revenues rose to $13.87B (+23% y/y, +9% q/q) and diluted EPS hit $11.95, with ROE/ROTE at 14.6%/15.5% as Global Banking & Markets and Asset & Wealth Management both accelerated .
  • Non-GAAP/selected items provided a tailwind: reductions in the FDIC special assessment estimate, alongside other selected items, added $0.98 to Q4 EPS and lifted ROE by ~120 bps, while YoY opex benefited from the prior-year FDIC fee and lower CIE-related depreciation .
  • Strategic catalysts: formation of the Capital Solutions Group aims to capture private credit origination across public/private markets; investment banking backlog increased; management expects broader deal activity through 2025 as CEO confidence and sponsor activity improve .
  • 2025 guideposts: tax rate ~20% (vs. 22.4% in 2024), target Platform Solutions to pre-tax breakeven in 2025, and alternatives fundraising consistent with recent years; dividend maintained at $3.00 per share; CET1 cushion ~130 bps over requirement .

What Went Well and What Went Wrong

What Went Well

  • “Record” financing in FICC and Equities drove durable revenue base; GBM net revenues of $8.48B were +33% y/y with Equities +32% and FICC +35% y/y; investment banking fees +24% y/y as ECM and leveraged finance revived .
  • AWM momentum: Q4 net revenues rose to $4.72B (+8% y/y, +26% q/q), with record management & other fees ($2.82B) and stronger incentive fees ($174M); AUS reached $3.14T with $92B net inflows in Q4 .
  • Assertive strategy and tone: “We have met or exceeded almost all of the targets we set in our strategy… grown our revenues by nearly 50% and enhanced the durability of our franchise,” CEO David Solomon stated, citing One GS and optimism for 2025 activity .

What Went Wrong

  • Platform Solutions still a drag: Q4 net revenues $669M (+16% y/y) but pre-tax loss of $(252)M; provision for credit losses $449M from credit card NCOs; management reiterated path to pre-tax breakeven in 2025 .
  • FICC intermediation softness vs. Q3: GBM FICC intermediation fell to $1.75B (−13% q/q), partly offset by higher financing; Equities intermediation also −12% q/q, reflecting mix and activity shifts .
  • Regulatory uncertainty persists: management highlighted litigation against the Fed to improve CCAR transparency and noted broader Basel III/G-SIB calibration risks; while constructive outcomes are hoped, timing/outcomes remain unpredictable .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Net Revenues ($B)$12.73 $12.70 $13.87
Net Interest Income ($B)$2.24 $2.62 $2.35
Provision for Credit Losses ($MM)$282 $397 $351
Operating Expenses ($B)$8.53 $8.32 $8.26
Net Earnings ($B)$3.04 $2.99 $4.11
Net Earnings to Common ($B)$2.89 $2.78 $3.92
Diluted EPS ($)$8.62 $8.40 $11.95
ROE (Annualized, %)10.9% 10.4% 14.6%
ROTE (Annualized, %)11.6% 11.1% 15.5%
Efficiency Ratio (%)N/AN/A59.6%

Segment breakdown – Global Banking & Markets (GBM)

GBM ($MM)Q4 2023Q3 2024Q4 2024
Advisory1,005 875 960
Equity Underwriting252 385 499
Debt Underwriting395 605 595
Investment Banking Fees1,652 1,865 2,054
FICC Intermediation1,295 2,013 1,750
FICC Financing739 949 989
FICC Total2,034 2,962 2,739
Equities Intermediation1,502 2,209 1,953
Equities Financing1,105 1,291 1,498
Equities Total2,607 3,500 3,451
Other61 227 235
GBM Net Revenues6,354 8,554 8,479

Segment breakdown – Asset & Wealth Management (AWM)

AWM ($MM)Q4 2023Q3 2024Q4 2024
Management & Other Fees2,445 2,619 2,818
Incentive Fees59 85 174
Private Banking & Lending661 756 736
Equity Investments838 116 729
Debt Investments384 178 264
AWM Net Revenues4,387 3,754 4,721

Segment breakdown – Platform Solutions

Platform Solutions ($MM)Q4 2023Q3 2024Q4 2024
Consumer Platforms504 333 597
Transaction Banking & Other73 58 72
Net Revenues577 391 669
Provision for Credit Losses577 452 449
Operating Expenses1,232 498 472
Pre-tax Earnings/(Loss)N/A(559) (252)

KPIs and capital

KPIQ3 2024Q4 2024
AUS Ending Balance ($T)$3.103 $3.137
AUS Net Inflows ($B)66 92
Book Value/Share ($)$332.96 $336.77
Headcount46,400 46,500
CET1 Ratio (Standardized)14.6% 15.0%
CET1 Ratio (Advanced)15.5% 15.4%
Supplementary Leverage Ratio5.5% 5.5%
Avg Global Core Liquid Assets ($B)447 422
Declared Dividend/Share ($)$3.00 (Q3 declaration) $3.00 (declared Jan 14, 2025)

Non-GAAP/selected items impact

ItemQ4 2024 Impact
FDIC Special Assessment Fee & Selected Items – Impact to EPS$0.98
FDIC Special Assessment Fee – Reduction of estimate in Q3/Q4Noted qualitative reduction
Opex YoY benefit from prior-year FDIC fee and lower CIE depreciationQualitative drivers

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax RateFY 2025N/A~20%New FY 2025 guide
Platform Solutions Pre-taxFY 2025Drive toward breakevenPre-tax breakeven targetedMaintained/clarified
Alternatives FundraisingFY 2025N/AConsistent with recent yearsDirectional guide
Common DividendOngoingIncreased to $3.00 in 3Q24$3.00 declared Jan 14, 2025Maintained
Capital CushionNear-termCET1 buffer flexible~130 bps above requirementReiterated

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/Technology initiativesBoard visit to Silicon Valley; AI as financing tailwind Efficiency program leveraging AI; operating stack focus Continues leveraging AI for productivity; investors should expect ongoing efficiencies Building momentum; execution-focused
Regulatory/legalStress test opacity; SCB buffer, buyback moderation Basel III reproposal concerns; capital buffer philosophy Lawsuit vs Fed to improve CCAR transparency; expect constructive dialogue but uncertain timing Active engagement; uncertainty persists
Capital markets recovery“Early innings” of M&A/ECM recovery; backlog up Backlog up sequentially; sponsors to re-engage; ECM below 10-yr averages CEO confidence rising; backlog up; expect activity throughout 2025 Improving trajectory
Private credit & Capital SolutionsPrivate credit fund closings; $20B credit strategies Integrated origination across spectrum; competitive positioning Formation of Capital Solutions Group; harness public/private origination Structural growth priority
Wealth lending penetrationDeepening UHNW lending; adviser footprint growth Underpenetrated, grew balances +$5B; multi-year journey Continued focus; lending solutions as key opportunity Scaling steadily

Management Commentary

  • David Solomon (CEO): “We have met or exceeded almost all of the targets… grown our revenues by nearly 50% and enhanced the durability of our franchise… harnessing the power of One Goldman Sachs… to create further value for our shareholders.”
  • Strategic focus: “Formation of our Capital Solutions group… harness our financing, origination, structuring and risk management offerings across both public and private markets.”
  • 2025 posture: “We remain confident in our ability to deliver for clients and drive strong returns… expect fundraising [in alts] to be consistent with recent years… tax rate approximately 20%.”

Q&A Highlights

  • Regulatory outlook: GS joined industry suit to improve CCAR transparency; management expects potential constructive changes but will maintain prudent capital buffers amid uncertainty .
  • Platform Solutions: Apple Card performance improving; PS remains a short-term ROE drag (75–100 bps) but targeted to pre-tax breakeven in 2025/2026 .
  • Capital Solutions structuring: Integrated GBM platforms (traditional IB, capital solutions, global markets) positioned to accelerate growth via coordinated public/private origination .
  • Sponsor/M&A timing: Expect constructive deal environment through 2025, with backlog and sponsor inquiries rising; activity should normalize toward 10-year averages .
  • Efficiency & operating leverage: Efficiency ratio improved materially in 2024; programmatically driving efficiencies to fund growth investments, notably in engineering/AI .

Estimates Context

  • S&P Global consensus (EPS and revenue) for Q4 2024 was unavailable due to data access limits at the time of request; therefore, we cannot quantify beats/misses versus Wall Street estimates now. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Strong Q4 print with broad-based segment strength and higher ROE/ROTE underscores GS’s through-the-cycle earnings power and improving operating leverage .
  • Durable revenue mix advancing: record financing revenues (FICC/Equities) and record AWM fees continue to diversify earnings and reduce cyclicality .
  • 2025 catalysts: capital markets normalization (M&A/ECM), sponsor re-engagement, and the new Capital Solutions Group should sustain GBM momentum .
  • Watch Platform Solutions trajectory: credit costs remain elevated in cards, but management targets pre-tax breakeven in 2025; monitor quarterly PCLs and opex .
  • Capital strength and shareholder returns: CET1 cushion ~130 bps and $3.00 dividend maintained provide flexibility; active buybacks contingent on client opportunity/regulatory clarity .
  • Regulatory path is a swing factor: CCAR/Basel outcomes could influence capital levels and deployment; GS is proactively engaging, but timelines/outcomes remain uncertain .
  • Tax rate guide to ~20% for 2025 is a modest tailwind vs. 2024 actual (22.4%); monitor effective tax rate in quarterly results .