Reports

Consumer, Wealth Management Net Revenues Shine At Goldman Sachs

Editorial Staff, 18 October 2021

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The US firm's wealth, consumer business now accounts for 15 per cent of total revenues. They grew at a rapid pace in the third quarter of this year.

Goldman Sachs last Friday reported that net revenues in consumer and wealth management were $2.02 billion for the third quarter of 2021, rising 35 per cent higher than the third quarter of 2020 and 16 per cent higher than the second quarter of 2021.

Net revenues in this business area of the US firm stood at $1.64 billion, rising 40 per cent from the third quarter of 2020. 

Management and other fees were significantly higher, primarily reflecting the impact of higher average assets under supervision. Incentive fees were significantly higher, due to harvesting, and net revenues in private banking and lending were higher, primarily reflecting higher loan balances, Goldman Sachs said. 

The overall group logged net revenues of $13.61 billion and net earnings of $5.38 billion in Q3 this year. Net revenues were $46.70 billion and net earnings were $17.70 billion for the first nine months of 2021.

Provision for credit losses was $175 million in Q3, down from $278 million a year earlier and a net benefit of $92 million for Q2 this year.

Operating costs were $6.59 billion, 6 per cent higher than the third quarter of 2020, falling 24 per cent from Q2 2021. 

The cost/income ratio for the first nine months of 2021 was 52.8 per cent, contracting from 70.3 per cent for the same nine months of 2020.

The increase in operating expenses compared with the third quarter of 2020 was due to higher technology expenses, professional fees, transaction-based costs and market development expenses. These increases were partially offset by significantly lower net provisions for litigation and regulatory proceedings. Compensation and benefits expenses were slightly higher.

Net provisions for litigation and regulatory proceedings for the third quarter of 2021 were $52 million compared with $256 million for the third quarter of 2020.  

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