End of the year with a slump in profits

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Gloomy mood in New York: For Goldman Sachs, the end of the year was below forecast

Photo: Richard Drew / dpa

For Goldman Sachs, 2021 ended worse than expected. The US investment bank suffered a slump in profits at the end of the year in view of weaker proceeds from the trading business. According to its own statements on Tuesday, the financial group earned a bottom line of 3.9 billion US dollars (3.4 billion euros) in the three months to the end of December, 13 percent less than a year ago. Analysts had expected a better result. The share initially reacted with significant price losses.

Thanks to strong growth in classic investment banking, which includes assisting companies with IPOs, takeovers and mergers, Goldman's earnings increased by eight percent to $12.6 billion.

But the trading division had to make cutbacks as the stock market boom subsided during the corona crisis.

In particular, the business with equities brought in significantly less money - here the income fell by eleven percent compared to the previous year.

disappointment among investors

The numbers were disappointing for investors. Goldman shares are down around 4 percent pre-market. Business actually went well in 2021, with profits up 129 percent to $21.6 billion. Bank boss David Solomon spoke of a record year thanks to an "extraordinary performance". However, the strong increase in profit was also due to the reversal of provisions made for loans at risk of default due to the pandemic. Total earnings rose nearly a third to $59.3 billion.

Other large US banks such as JPMorgan Chase and Citigroup also weakened in the fourth quarter, as the annual reports showed on Friday.

At US industry leader JPMorgan, profits fell 14 percent year-on-year to $10.4 billion.

Citi even had to cope with a decline of around 26 percent to 3.2 billion dollars.

In the case of the US competitor from Goldman Sachs, the trading business in particular also weighed on, while investment banking flourished.

col/dpa