Goldman Sachs (NYSE:GS) is focusing on providing loans to its affluent clients. Per the Wall Street Journal, the financial services giant is expanding its lending activities tailored specifically for private-wealth clients. This includes individuals and families who, on average, maintain a substantial $60 million relationship with the bank. Notably, the company will release its fourth-quarter financial results on January 16.
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According to the report, Goldman Sachs introduced a new type of loan designed for wealthy customers within its asset and wealth management division. These loans enable clients to borrow against the value of their investments in select private equity, credit, and other illiquid funds.
In addition, Goldman Sachs has experienced a significant uptick in loans provided to institutional clients, primarily hedge funds, within its trading division. This strategic shift towards catering to affluent clients will likely contribute substantially to the bank’s overall revenue in Q4.
Goldman Sachs – Q4 Expectations
Analysts expect Goldman Sachs to post revenue of $10.8 billion compared to $10.6 billion in the prior-year quarter. However, Goldman Sachs’ Q4 revenue will likely mark a sequential decline due to the lower revenue in the investment banking segment.
Speaking at its U.S. Financial Services Conference in December, its CFO Denis Coleman said that the investment banking segment continues to remain weak. However, the bank retains its leadership in the division. Further, Coleman noted that the trading revenue in Q4 is trending roughly in line with the prior year’s quarter. Meanwhile, within trading, the equities business is performing well.
For the bottom line, Wall Street expects Goldman Sachs to post earnings of $3.62 per share, higher than its prior-year quarter’s EPS of $3.32. However, its EPS is likely to decline on a quarter-over-quarter basis.
Is Goldman Sachs a Buy or Sell?
Goldman Sachs is diversifying its revenue base and returning cash to its shareholders. However, its stock has appreciated by over 21% in the last three months, keeping analysts cautiously optimistic about its prospects.
With 12 Buy and seven Hold recommendations, Goldman Sachs stock has a Moderate Buy consensus rating. Analysts’ average price target of 404.56 implies 7.1% upside potential from current levels.
