Volkswacht Bodensee - Goldman Sachs' profits jump on hot merger market

Fueled by higher revenues from merger advisory services and financial markets trading, Goldman Sachs reported profits of $4.4 billion in the fourth quarter, up 12 percent from the year-ago period.

Executives expressed a bullish outlook on continued deal flow in 2026, noting the potential for more initial public offerings and that its backlog of anticipated future deal revenue stands at a four-year high.

CEO David Solomon said corporations sense a better climate under Donald Trump after the Biden administration, where leading antitrust officials were viewed as broadly hostile to consolidation.

"CEOs definitely believe that the art of the deal and scaled consolidation is possible now," Solomon said on a conference call with analysts.

Overall revenues were $13.5 billion, down three percent from the year-ago period, due largely to ending its credit card business with Apple.

However, Goldman's profits were boosted by a $2.1 billion accounting benefit from dropping the Apple credit card venture.

Investment banking fees came in at $2.6 billion in the final three months of 2025, up 25 percent. The New York banking giant also scored double-digit increases in revenues for equities trading and fixed income, currency and commodities.

Goldman's press release did not mention specific transactions, but the company advised Metsera in its buyout of up to $10 billion from Pfizer.

In prior quarters, Goldman has pointed to $12 billion deals involving energy company NRG and in Electronic Arts' $55 billion deal to go private.

"I think CEOs, boards are looking and saying 'Okay, we've got a window here a handful of years, to consider big, huge, transformative things,'" said Solomon.

"I think the world is set up at the moment to be incredibly constructive in 2026 in M&A and capital markets activity," Solomon said.

"What could change that? Something could go on in the world, sort of an exogenous event, or macro event that changes the sentiment," he said, adding that this is not the bank's view of a likely scenario.

Goldman's earnings per share topped analyst estimates while revenues lagged projections.

Shares jumped 4.6 percent in early-afternoon trading.

A.Kunz--VB