It’s yet another sign of the disconnect between the strength of the stock market and the struggles many average Americans face due to the coronavirus pandemic.
Goldman Sachs reported quarterly revenue of $11.74 billion, up 18% from a year ago. The company posted net income of $4.5 billion, a 135% surge from the fourth quarter of 2019.
The company reported record revenue from its investment banking unit, thanks to booming demand for initial public offerings and an increase in merger activity. Goldman Sachs also said it posted its best year for global markets revenue in a decade, largely due to strong trading volume for stocks, bonds, currencies and commodities.
Goldman Sachs chairman and CEO David Solomon said in a press release that “it was a challenging year on many fronts” and added that “we hope this year brings much needed stability and a respite from the pandemic.”
“It’s a tale of two different cities,” said Mark Doctoroff, global co-head of financial institution coverage for MUFG, in an interview with CNN Business about bank earnings. “Corporate America is resilient and healthy but small businesses are hurting.”
Doctoroff noted that banks with more exposure to big businesses — ones that advise on mergers and initial public offerings — are doing well. But those with deeper ties to consumers and smaller local merchants have been hit harder by the Covid-19 pandemic and resulting economic slowdown.
Still, Goldman Sachs is planning a bigger move into consumer finance. The company runs the online banking company Marcus by Goldman Sachs, which offers loans and savings accounts.
Goldman Sachs said in its earnings release that revenue from its consumer and wealth management unit grew 15% last year to $6 billion. The business now accounts for nearly 15% of the firm’s overall revenue.
But Solomon, like many other business leaders recently, stressed that any rebound for consumer spending and the broader economy will largely depend on the success of Covid-19 vaccinations and plans for more government stimulus.
“Although we are now seeing the initial rollout of vaccines in the U.S., U.K. and other nations, there remains significant uncertainty in the path forward related to virus resurgence, vaccine distribution and further fiscal stimulus and geopolitical risks,” Solomon said on the earnings call.
He added that “progress on economic growth is contingent on an effective vaccine rollout program globally” and urged political leaders around the world “to do everything possible to implement a coordinated and comprehensive distribution plan.”
“In its absence,” Solomon said, “economic recovery will be unnecessarily delayed.”