Goldman book (GS) – Get a free report had a tough fourth quarter to say the least. Profits fell 66% from a year earlier, falling short of analyst expectations.
CNBC commentator Jim Cramer did not hesitate to describe the operation of this giant bank.
“This is disappointing,” he said on CNBC. “For Goldman Sachs, it’s not something to breathe. I don’t see anything in [the earnings report] prefer.”
Cramer noted Goldman’s troubles getting into consumer banking. The company said Friday that a sizable portion of its consumer lending business, which includes credit cards, has suffered a $3 billion loss since 2020.
“It spent a lot of money with no obvious profit,” Cramer said.
“They will say the card business is not the problem,” he continued. But Cramer cited an anonymous top banker who said you couldn’t start making credit cards from scratch like Goldman did.
“Goldman Sachs is a high net worth company,” says Cramer, suggesting that Goldman could succeed in “lower net worth” banking if it could do it all with an automated system. motion or artificial intelligence.
Investment banking, wealth management
Cramer says Goldman needs to do better in investment banking — mergers and acquisitions and corporate finance — to make up for its consumer banking problems.
Corporate investment bank revenue fell 49% to $1.25 billion in the fourth quarter, down from $2.43 billion a year earlier.
Cramer also said the cost of Goldman’s bloat was an issue. Operating expenses rose 11% in the fourth quarter to $8.09 billion. And total compensation costs were $3.8 billion, up 16%.
“That’s unacceptable,” Cramer said. “It would be one thing if they had a massive wealth management business with the leap that we saw at Morgan Stanley,” he said. However, “the management of the property is disappointing.”
Goldman’s wealth and wealth management revenue hit $3.6 billion in its latest quarter, down 27% from a year ago.
Meanwhile, Morgan Stanley posted record wealth management revenue of $6.62 billion, up 5.9%.
Goldman’s earnings bottom line: “They should have made more,” Cramer said.
The author of this story owns shares of Goldman Sachs.
