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Goldman Sachs Group Inc. says confidence appears to be building around Wall Street deal making as the marquee investment bank looks toward the coming year after recent rockiness.
Goldman Sachs
GS,
Chief Financial Officer Dennis Coleman said the macroeconomic background appears to be more supportive for improved debt transactions and other deals.
“We’ll have a bit of a more clear runway in 2024,” Coleman said Tuesday at the Goldman Sachs U.S. Financial Services Conference.
Asked about how the fourth quarter is shaping up, Coleman said the bank continues to see client engagement in its fixed-income and equities units.
“Our equities business over the course of the entire year has been a source of strength … so that continues,” he said.
Also read: Goldman Sachs money manager digs into three themes for long-term growth
Investment banking has been below trend, but Goldman Sachs has remained No. 1 in the merger-and-acquisition advisory business, as well as the top player in equities and No. 2 in high-yield debt, he said.
“The level of activity [is] more muted,” Coleman said. “But from a backlog and client and a franchise-positioning perspective, it feels pretty good in banking.”
Asked about compensation, Coleman said Goldman has been focused on pay for performance, with expenses expected to be up by low-to-mid single digits for full year 2023, including severance expenses.
Coleman did not comment on reports of the end of Goldman’s credit-card venture with Apple Inc.
AAPL,
He cited a public announcement by General Motors Co.
GM,
about finding a potential new issuer under its credit-card program.
Also read: Goldman Sachs advises employees on plan to divest GM credit card
In terms of the overall investment-banking market, a Dec. 1 report by Jefferies on investment banking by the five largest banks on Wall Street revealed “muted” trends in the fourth quarter.
For the fourth quarter as of Nov. 29, JPMorgan Chase & Co.
JPM,
was ringing up a roughly 15% increase in investment-banking revenue compared with the year-ago period, and Citigroup Inc.
C,
was up by about 13%, according to Dealogic data cited by Jefferies.
Bank of America Corp.’s
BAC,
investment-banking revenue was down by low single digits as of Nov. 29, while Morgan Stanley’s
MS,
was down by about 3% and Goldman Sachs’s was off about 10% compared with the year-ago period.
Compared with the third quarter, investment-banking revenue is up more than 20% at Morgan Stanley, down by single digits for Citigroup, Goldman Sachs and JPMorgan, and lower by about 9% for Bank of America.
“Hopes for a capital markets comeback in 2024 remain, with deal announcement volumes showing signs of green shoots,” Jefferies analysts said.
The fourth quarter is also showing some “signs of life” for fixed income and equities, with volatility mixed across the sector.
Also read: Wells Fargo to book up to nearly $1 billion in fourth-quarter severance costs
