Goldman Sachs Group missed quarterly profit expectations on Tuesday as weak trading activity and rising expenses blighted the gains from a record-breaking M&A boom, sending the shares of Wall Street's premier investment bank down more than 8%.
The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kellymissed quarterly profit expectations on Tuesday as weak trading activity and rising expenses blighted the gains from a record-breaking M&A boom, sending the shares of Wall Street's premier investment bank down more than 8%.
Goldman's performance was also marred by higher special charges of $432 million, mostly related to provisions for litigation and a reserve build of $213 million.Wage inflation has also crimped banks' profits as America's top lenders are forced to raise salaries for junior bankers over the past year to retain top talent.
Goldman's operating expenses jumped 23%, mainly due to higher compensation and benefits costs. Last week, JPMorgan's top executives flagged similar high expenses and said the lender was ready to splurge on compensation to win the talent war against rival banks. Its earnings per share is expected to drop from $59 in 2021 to $41 in 2022, as per consensus estimates and so "it is not as though the world doesn't understand that 2021 was a unique and likely unrepeatable year", Kotowski said.
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