Goldman Sachs turned its focus to Platform Solutions growth in the fourth quarter of 2022 as the section saw a 171% increase in revenue year over year to $513 million to help offset its shrinking team.  

WHY IT MATTERS: Goldman reported a “disappointing” and “challenging” Q4 with a 25% year-over-year decline in total noninterest revenues of $39.7 billion, Chief Executive David Solomon said today during the bank’s Q4 earnings call.

THE BIG PICTURE: The company reduced its staff by 6% in Q4, signaling a pullback from the more successful economic periods of 2020 and 2021, according to the bank’s earnings presentation.  

“This quarter, we completed our reorganization, which will further strengthen our core businesses, help us scale our growth platforms and improve efficiency,” Solomon said. “This is an important and purposeful evolution of our strategic journey.”  

BY THE NUMBERS: Goldman Sachs reported for Q4: 

• Net revenues declined 10% YoY to $10 billion; 
• Net income declined 66.3% YoY to $1.3 billion; and 
• Communications and tech expenses grew 12% YoY to $481 million. 

STATE OF PLAY: Goldman is forecasting a cautious outlook for 2023 following low revenues during Q4, Solomon said, noting the “complex economic backdrop” was a major reason for the “challenging fourth-quarter performance. 

FLASHBACK: The acquisition of fintech GreenSky in Q2 and the subsequent Q3 launch of Goldman’s Platform Solutions segment — which consolidated fintech platforms across the bank — increased Goldman’s non-compensation expenses in Q4 despite a reduced headcount, according to the earnings presentation. The acquisition of Netherlands-based asset manager NN Investment Partners during Q2 2022 also contributed to the increase due to integration related costs, the company said. 

THE BOTTOM LINE: Moving forward, Goldman is planning to increase its fintech partnerships and use technology to be more productive with fewer employees. 

“For now, our priority is to strengthen our deposit franchise, card partnerships, and GreenSky,” Solomon said. “Our narrowed approach will allow us to reduce our foreign investment spend and rationalize expenses. We are very focused on developing a path toward profitability and platform solutions.” 

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