A sharp slowdown in deal-making sent 2023 profits at Goldman Sachs and Morgan Stanley tumbling to the lowest level in four years.
Goldman’s earnings fell nearly 25pc to £6.7bn last year. Morgan Stanley dropped 18pc to £7.2bn.
Goldman Sachs and Morgan Stanley profits tumble to the lowest level in four years
That marked the least profitable year for both Wall Street giants since 2019, as merger and acquisition (M&A) activity dried up amid soaring interest rates.
Goldman profits were also hit by its retreat from consumer banking, including a write down on loans business GreenSky before its sale last summer.
But profit bounced back in the final three months of the year as Goldman’s equity trading division was boosted by a stock market rally.
Chief executive and chairman David Soloman said: ‘With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024.’
Revenue for 2023 was £36.5bn, 2pc lower than 2022, as sales in its banking and markets unit tumbled 8pc to £23.7bn.
Investment banking fees were 16pc lower at £4.9bn due to the ‘significant decline in industry-wide completed mergers and acquisitions transactions’.
However, activity started to recover in the final three months of the year, pushing fourth quarter earnings up 51pc to £1.5bn. Revenue in the three months to the end of December was £8.9bn.
Morgan Stanley said fourth quarter profit fell from £1.7bn to £1.2bn.
Full-year profits also fell as the cost of its wealth management business rose.
It also took a £422.6m hit related to payments for a government deposit insurance fund, which was drained of £12.6bn last year after two regional US lenders collapsed.