Goldman Consumer Banking segment grows 8%

Wall Street may be focused on trading revenue and rising compensation costs, but digging deeper into Goldman Sachs’ latest results shows continued traction in its digital and consumer banking efforts.

At a high level, the company’s latest results fell below Street’s consensus estimate, in part due to higher operating expenses. The company earned $10.81 per common share, and analyst estimates had pegged that position at $11.76.

Consolidated revenue rose 8% year-on-year to $12.6 billion, about half a billion dollars above consensus (investment banking revenue jumped 45%).

Revenue from the firm’s personal banking division, home to the company’s recent credit card launches, showed an 8% year-over-year gain to 375 million billion, growing 23% for the full year to $1.5 billion.

Additional material Company releases along with earnings show installment loans last quarter were $4 billion, up from $3 billion in the third quarter of last year. Credit card lending in the most recent period was $8 billion, double from a year ago.

Total consumer and wealth management assets under watch, which includes Marcus, across the business were $751 billion in the fourth quarter, up from $615 billion a year ago. Total net revenue for the consumer and wealth management segment was $1.9 billion, up 19% year-over-year.

On credit quality, the company said its consumer credit rates were 2.3%, down 190 basis points year-over-year.

Consumer bank details

CEO david solomon said on the analyst conference call, “I continue to be excited about our creation of the consumer banking platform of the future. We empower over 10 million customers to take control of their financial lives.

Part of the strategy, he said on the call, is to diversify into new products and services.

As an example, he pointed to the recent introduction of the GM rewards card.

As reported in this space last week, the collaboration and launch with GM would be the second co-branded card launched by the Wall Street giant, on the heels of its partnership with Apple.

The bank will take over the cards business from Capital One Financial, which has offloaded some smaller wallets – and while the deal for Goldman is muted, it sees the bank moving more into retail banking. The deal affects about 3 million existing GM credit cardholders, whose accounts were converted to Goldman this month.

Read more: Marcus My GM Rewards Card turns points into car discounts

Chief Financial Officer Denis Coleman said on the call that the 10 million customer base in retail banking reflected growth of around 60% year-on-year, adding that gross loan balances had increased. by 50%.

During the Q&A with analysts, management was asked about Goldman’s September 2021 strike to buy FinTech lending firm GreenSky. CEO Solomon said, “What was interesting for us with GreenSky was the merchant network. We were thinking about how we were going to build a merchant network, and we thought it would take a long time. And this allowed us to acquire a network of merchants.

Read also : Goldman Sachs to buy fintech lender GreenSky in $2.24 billion equity deal

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