Goldman’s $4 Billion Profit Not Enough

Goldman Sachs has posted record profits for Q4 of 2021 with a total of $3.9 billion earned, equating to $10.81 a share. Total revenue for the company came in at $12.6 billion for the quarter, an 8% increase over the previous year.

Even though this was, overall, an excellent year for Goldman, the numbers have failed to reach what was forecasted by investors and analysts. Expectations were set for a $4.1 billion profit, or $11.70 a share. Overall Goldman Sachs shares have also tumbled by 8% on the news.

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Revenue for Goldman’s consumer and wealth management services, including the company’s Marcus online banking unit, also hit record highs. According to CEO David Solomon, “Our leadership team remains committed to growing Goldman Sachs, diversifying our businesses, and delivering strong returns for shareholders.”

Many investment banks were able to benefit from increased trading activity resulting from companies looking to go public or make acquisitions in 2021. Revenue from the investment banking industry grew by 58% over 2020.

Despite these record numbers, Solomon warns analysts that the Omicron variant of COVID-19 and the resulting supply chain issues could result in further inflation, stating, “there's no surprise that the recent surge in cases is putting even more pressure on supply chains. Inflation is persisting in many countries, and major central banks are beginning to raise rates.”

Solomon continued, “Inflation may be above trend for some time. And in the near term, inflationary pressures may continue to intensify before they start to decrease. I also believe that we could see more volatility as these easing policies are unwound."

Currently, Goldman Sachs and most other Wall Street firms have delayed plans for their employees to return to their offices. Goldman has set aside $17.7 billion to be used to compensate employees working in these conditions as well as reward them for a solid 2021. This equates to $404,000 on average for 43,900 workers, a 33% increase from 2020.