Goldman Sachs Group will set an expense target at its investor day later this month, management stated Wednesday after the bank missed Wall Street profit estimations because of inflated costs.
A giant portion of Goldman’s bloated expense line came from setting aside another $1.1 billion to cowl legal and regulatory prices associated with the 1MDB Malaysian corruption scandal.
Nevertheless, Goldman further spent more on compensation, technology, occupancy costs, and professional charges, some of which pertained to new enterprises, like the credit card it launched with Apple and its transaction banking business.
The bank’s operating bills hiked 42% in the fourth quarter and 6% for the complete year.
The lender spent 68 cents for every dollar it made in 2019, up from 64 cents per greenback the earlier year. Investors watch that efficiency metric intently to gauge how well an organization manages costs.
Several analysts quizzed CEO David Solomon and Chief Financial Officer Stephen Scherr about prices on an earnings call, asking when the lender’s investments in varied businesses will begin paying off.
Goldman spent approximately $700 million on growth initiatives in 2019, before taxes.
Administration plans to offer an expense goal “in very concrete terms” at its investor day on January 29, Scherr stated.
Scherr further talked about that of its equity investments, which are investments the bank makes with its own cash, it dumped its shares of Uber Technologies and lowered the number of shares it owned in Tradeweb Markets.