Both Goldman Sachs and Morgan Stanley reported lower profits, with fourth-quarter profits plunging 66 percent at Goldman and 40 percent at Morgan Stanley. Additionally, both banks also reported lower revenue.
Shares at Goldman are down 6.4 percent. According to the Wall Street Journal, that is causing investors to seek clarity concerning the future of Goldman. Recently, Goldman relaxed its efforts to build a sizeable consumer-facing business. Goldman continues to focus its wealth management unit and less on high-risk units, such as investment banking. Executives at Goldman shared that they have increased their reserve funds in response to existing credit-card balances. Goldman has also decreased credit-card originations and tightened underwriting.
Investment bankers at Goldman Sachs and Morgan Stanley have experienced declining fees from advising companies on mergers and stock and bond offerings. Investment banking revenue fell 48 percent at Goldman and 49 percent at Morgan Stanley.
On the other hand, Morgan Stanley CEO James Gorman is confident that investment banking will pick up again. Morgan Stanley emphasized the results in its wealth-management business, where revenue rose 6 percent and profit increased by one-third. In 2022, wealth management accounted for 45 percent of Morgan Stanley's revenue.
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