UPDATE: This article includes comments from CEO David Solomon and CFO Denis Coleman, as well as new details on the future of the Apple Card.
After posting earnings growth in the fourth quarter, Goldman Sachs is optimistic about 2025 — especially as Donald Trump returns to the White House.
Goldman CEO David Solomon and CFO Denis Coleman expressed hopes that their business would thrive under the second Trump administration, particularly in terms of regulations, taxes and monetary policy.
And to top it off, Solomon said, business leaders are just feeling better about the future.
"There's been a sentiment shift broadly as I talk to CEOs since the election," Solomon said in a conference call with analysts on Wednesday, adding that Goldman was still keeping an eye out for risks. "I think at the moment, for our business and our business mix … it feels like we have a tailwind going into 2025."
In its earnings announcements, the New York-based megabank did not provide specific guidance for the new year. But in general terms, Goldman expressed confidence in the future, particularly in light of its recent performance. In the last three months of 2024, Goldman's net income reached $4.11 billion, up from $2.01 billion in the same period in 2023.
But there are also external conditions that Goldman expects to change in its favor — and with good reason. Throughout the presidential election, Trump promised to slash taxes and regulations for American businesses.
"While there remains some policy uncertainty, there is an expectation that the regulatory burdens will be reduced, which should serve as a tailwind to risk assets and capital deployment," Coleman said. "We are optimistic on the outlook for 2025 and expect a further pickup in M&A and IPO activity."
Solomon echoed this point, stressing the potential benefits to mergers and acquisitions.
"There is a significant backlog from sponsors and an overall increased appetite for dealmaking, supported by an improving regulatory backdrop," the CEO said. "The combination of these conditions should spur further activity in 2025."
The firm is also feeling bullish about taxes. In 2024, Goldman's effective tax rate was 22.4%. But in 2025, Coleman said, Goldman expects a tax rate of about 20%. He did not mention the new administration as a reason, but Trump has repeatedly vowed to extend his 2017 Tax Cuts and Jobs Act and implement other tax cuts.
Then there's the Federal Reserve. Last month, Goldman joined other major banks to sue the Fed over its use of stress tests, which they said were inconsistent and lacked transparency. In Wednesday's call, Solomon repeated those complaints but also expressed some hope that the Fed could soon become more accommodating to the banks' concerns.
"Given the change in administration and change of leadership inside the Fed, our expectation would be that there'd be a different approach than what has been put forward," Solomon said. "But again, we'll have to watch, and we'll have to wait."
A retreat from consumer banking
This new optimism comes at the end of what in some ways has been a difficult year for Goldman. The firm spent much of 2024 unwinding its botched foray into consumer banking under a new department called Platform Solutions, which included new lending platforms and a set of credit cards.
In October 2024, the Consumer Financial Protection Bureau fined Goldman over multiple violations related to the Apple Card, which the firm and Apple had launched together in 2019. The CFPB ordered the firm to pay at least $19.8 million to affected Apple Card users, along with a $45 million civil money penalty.
During Wednesday's conference call, Solomon acknowledged that the Apple Card was a "drag" on Goldman's performance — but perhaps not for long.
"Obviously, the primary thing that's in Platform Solutions is the Apple partnership. As you know, we have a contract with Apple to run that partnership until 2030, although there's some possibility that it won't continue until that time frame."
Also in October, Goldman reached a deal to sell its General Motors credit card to Barclays, only two years after the firm launched the card with GM. The card proved to be an expensive misstep for Goldman — at the end of 2024's third quarter, the firm reported a $415 million charge in connection to the GM credit card portfolio.
Earlier in the year, Goldman was shaking off other vestiges of its consumer banking experiment. In March, the firm finalized its sale of GreenSky, a fintech platform that facilitates loans for home improvement projects. Goldman had bought the platform at the start of 2022. That year, GreenSky, and the new credit card programs cost the firm a combined $1.7 billion.
During the call, Wells Fargo analyst Mike Mayo asked Solomon about these initiatives.
"Why is Platform Solutions still around?" Mayo asked. "I mean, you're number one in dealmaking, and you haven't been able to work that out."
Solomon declined to answer that question.
More recently, Goldman has appeared to pivot back to what it does best: serving corporate and high net worth clients. Earlier this week, it announced the creation of the Capital Solutions Group, a new department that will focus on private credit, private equity and financing.
Solomon said the new unit "will harness the power of One Goldman Sachs to provide our clients a comprehensive suite of our financing, origination, structuring and risk management offerings across both public and private markets."
A strong end to the year
Goldman Sachs enjoyed a robust final quarter of 2024, boosted by its Global Banking and Market unit. Earnings per share were $11.95, beating analysts' forecasts of $8.35 according to S&P.
Net revenues totaled $13.87 billion, up 23% from a year ago.
Goldman attributed the quarter's growth to higher net revenues from all its businesses, but particularly from its Global Banking and Markets unit. In the fourth quarter, that department generated $8.48 billion in net revenues, a 33% rise from the same quarter in 2023.
Investment banking fees rose 24% to $2.05 billion, reflecting gains in equity and debt underwriting. The gains were driven by secondary and initial public offerings and private placements as well as leveraged finance activity, Goldman said.
Provisions for credit losses fell to $351 million from $577 million a year ago, with net charge-offs in the credit card portfolio accounting for the provisions.
"We are very pleased with our strong results for the quarter and the year," Solomon said in a statement. "With an improving operating backdrop and growing CEO confidence, we are harnessing the power of One Goldman Sachs to continue to serve our clients with excellence and create further value for our shareholders."
