Goldman Sachs CEO David Solomon admits the Wall Street giant expanded too quickly into consumer banking following earnings stumble
- At the World Economic Forum in Davos on Wednesday, Goldman Sachs CEO David Solomon explained his company's earnings miss.
- "In the consumer platforms, we did some things right. We didn't execute on some others," he told CNBC.
A day after Goldman Sachs posted its biggest earnings miss in a decade, CEO David Solomon admitted that the company moved too quickly into its consumer business.
"We obviously had a disappointing quarter and we tried to own that, you know, up front," Solomon told CNBC on Wednesday at the World Economic Forum in Davos, Switzerland.
The Wall Street giant's fourth-quarter earnings showed that profits cratered 66% from a year prior, clocking in at roughly $1.33 billion, or $3.32 a share, and 39% below the average estimate. Refinitiv data cited by CNBC noted that on a an earnings-per-share basis, it was the largest miss since October 2011.
In 2016, Goldman attempted to build a consumer-focused digital branch called Marcus, but in October last year pivoted away from it. Initially it had been launched to diversify away from the bank's core trading and advisory businesses, but it hasn't panned out.
Similarly, Goldman's acquisition of the Apple Card account in 2019 has also fallen short of profit expectations.
"In the consumer platforms, we did some things right. We didn't execute on some others," Solomon said. "We probably took on more than we should have, you know too much, too quickly."
He is still optimistic about the firm's partnership with Apple, and added that Goldman has a "very good deposits business."
Meanwhile, the exec pointed out that Goldman's asset management and lending was a strong point compared to other investment banks.
"Our relative asset growth and the performance of core business is actually quite good when you stand it up against peers," Solomon said. "So we're raising a lot of money serving clients — growing — that there's a lot of opportunity for us in the asset management business."
Meanwhile, rival Morgan Stanley topped fourth-quarter forecasts, led by its asset management business. JPMorgan, Bank of America, and Citi also beat views.