- Goldman Sachs posted a big Q4 2024 beat on revenue and EPS, led by strong equities and FICC trading plus higher investment-banking fees.
- BlackRock finished 2024 at about $11.6T in AUM with $641B of net inflows and record ~45% adjusted margins, helped by a push into private markets and data/tech via deals.
- Attention now turns to Morgan Stanley and the broader Q4 2025 outlook, where investment-banking fees are expected to rebound but execution, credit provisions, and volatile equity-investment returns could pressure earnings.
- Key themes to watch are AI-driven efficiency and cost control, a pickup in M&A/IPO activity, and integration risks from BlackRock’s acquisitions.
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Below is a breakdown of Goldman Sachs’ and BlackRock’s latest performance, what’s anticipated at Morgan Stanley, and the broader banking sector outlook, along with strategic implications and open questions.
Goldman Sachs Q4 2024: Upside Performance and Sources of Strength
Goldman delivered an earnings surprise in Q4 2024: EPS (diluted) of $11.95 vs. consensus around $8.07–$8.22; revenue of ~$13.87 billion, up ~23% YoY. Major growth came from trading: equities trading and fixed income, currency & commodities (FICC) both exceeded expectations. Investment banking fees rose ~24% to $2.05 billion driven by equity and debt underwriting, though advisory saw a modest decline. Assets & Wealth Management also delivered an ~8% increase in revenue. Efficiency ratios and ROE (annualized Q4 14.6%) reinforced tight execution.
BlackRock Q4 & Full-Year 2024: Record Inflows, Margin Expansion, Private Markets Push
BlackRock reported full‐year net inflows of $641 billion (Q4 was $281 billion), lifting AUM from ~$10.01 trillion to $11.55 trillion—a ~15% YoY gain. Q4 revenue grew ~23% YoY to $5.68 billion, with adjusted EPS of $11.93, a 23% increase. Adjusted operating margin rose from ~41.6% to 45.5%—a record for the firm—as all major revenue streams, especially base fees, performance fees, and technology services, saw strong growth. Key acquisitions (GIP completed; HPS and Preqin pending) are enhancing private credit and data/infrastructure capabilities.
What to Watch from Morgan Stanley and the Broader Banking Sector in Q4 2025
Investment banking fees across the “Big Five” banks (JPMorgan, GS, MS, BAC, Citi) are forecast to hit nearly $10 billion in Q4 2025—up ~13% YoY—and could take up more than 25% of total revenues, the highest since 2021. Goldman Sachs and Morgan Stanley are among those expected to benefit most, with projected fee income growth of ~17% in 2025, rising to ~11% in 2026. However, Goldman may see a slight YoY drop in EPS—likely driven by lower returns from equity investments, potential reserve needs, and elevated expense or capex investments, particularly in AI strategies and platform simplification.
Strategic Implications
- Elevated expectations intensify execution risk: With fee revenue predicted to climb, banks will need to show not just headline growth but disciplined cost management and forward guidance, especially around credit risk and capital deployment in uncertain interest and regulatory environments.
- AI and scale are becoming must-haves: Goldman’s OneGS 3.0 initiative is emblematic of a broader imperative among banks and asset managers to integrate AI/operational efficiencies to support margin expansion and cross-segment synergies.
- Private markets remain a growth lever: BlackRock’s acquisitions and “pro forma client assets” expansion in private credit suggest that products beyond traditional active/public markets are increasingly central to long-term growth strategies.
- Credit and regulatory risks linger: Even amid strong demand and deal flows, potential strains include credit card delinquencies, regulatory shifts (e.g. caps on interest rates), geopolitical risk, and trade policy; these could land asymmetrically across banks.
Open Questions
- How will Goldman manage equity investment performance; can it weather potentially weaker returns alongside trading volatility?
- What are Morgan Stanley’s specific forecasted revenue and EPS numbers, particularly for its investment banking and asset management divisions?
- To what extent will acquisitions by BlackRock (HPS, Preqin) be accretive in 2025 and 2026, especially given integration and regulatory cost drag?
- Will all banks be able to deliver in investment banking fees at anticipated growth levels—or will pinch points emerge in advisory or underwriting due to capital market cycles?
- How might regulatory or legislative efforts (credit card interest rate caps, trade policy, etc.) affect earnings trajectories and capital return strategies?
Supporting Notes
- Goldman Sachs Q4 2024 EPS: $11.95 per share; revenue: $13.87 billion, with earnings surprise vs consensus ~$8.20.
- Investment banking fees up ~24% YoY to $2.05 billion; equities underwriting revenues up ~98%, debt underwriting up ~51%, advisory down ~4%.
- BlackRock ended 2024 with $11.6 trillion AUM, full-year net inflows of $641 billion; Q4 net inflows of $281 billion.
- BlackRock Q4 adjusted operating margin: 45.5%, up ~280 basis points YoY; adjusted EPS $11.93 in Q4.
- Forecasts for 2025 investment banking fee growth ~17% for Goldman and Morgan Stanley; fees in Q4 2025 expected to exceed $10 billion industry-wide across major banks.
- The risk of Goldman’s EPS declining slightly YoY in Q4 2025 despite revenue strength; pressures include weaker returns on equity investments and elevated expense/capex investment for strategic ambitions.