Goldman Sachs beats profit estimates; Wells Fargo benefits from dealmaking rebound 

Goldman Sachs posted its biggest profit since the third quarter of 2021 to beat Wall Street expectations, driven by bankers who brought in more fees from dealmaking, debt sales and strength in trading.

The investment bank’s shares rose 2.6 per cent before the bell on Wednesday (Jan 15) as it earned US$11.95 per share in the fourth quarter, compared with US$8.22 expected by analysts, according to estimates compiled by LSEG.

Banking industry executives anticipate stronger dealmaking activity this year as the US Federal Reserve cuts interest rates and President-elect Donald Trump’s pro-business comments fuel optimism among investors.

“We are very pleased with our strong results for the quarter and the year,” CEO David Solomon said in a statement. “I’m encouraged that we have met or exceeded almost all of the targets we set in our strategy to grow the firm five years ago.”

Goldman’s investment-banking fees rose 24 per cent to US$2.05 billion in the fourth quarter, powered by debt underwriting that benefited from strong leveraged finance and corporate bond sales.

Wells Fargo’s profit meanwhile beat expectations in the fourth quarter powered by a rebound in dealmaking activity and forecast it would earn more from interest payments this year.

The bank’s shares rose 3.5 per cent to US$73.68 in premarket trading on Wednesday.

Wall Street was bolstered by a rebound in activity last year. Increasing confidence spurred companies to issue equity and debt. Corporations also struck deals, lifting volumes from a decade low in 2023.

“There’s a sense of optimism that people have for the activity levels that we should see in 2025 – that obviously needs to translate into actual deal activity,” Wells Fargo’s chief financial officer Michael Santomassimo said.

“Market participants feel more confident in their ability to execute on M&A.” REUTERS