Goldman Sachs’ US structured notes notional traded in 2023 has fallen by 15% to US$11.4 billion.

GS Finance, the issuer entity of Goldman Sachs (GS), closed the final quarter of 2023 with a strong recovery of its sales volume. 

The US bank collected US$3.7 billion from 1,130 SEC-registered structured notes in Q4 23, up 13.5% year-on-year, or an increase of 26.4% compared with Q3 23.

The full-year sales volume however reached US$11.4 billion, 14.5% lower than in 2022. The  bank managed to retain  the third position in the US issuer league table for 2023 after J.P. Morgan (US$16.9 billion) and Citigroup (US$11.6 billion). 

GS’ sales of structured products plunged in the first quarter of 2023 to US$1.9 billion, and was followed by a gradual rebound over the next two quarters.

GS Finance issued 146 callable fixed coupon bonds with US$2.5 billion principal amount, approximately one third of which, or US$893.9m, came from Q4 23.

For structured notes, Goldman Sachs & Co typically acts as the lead underwriter before they are sold to third-party distribution clients or broker-dealers, such as Simon Markets where GS Finance is a minority shareholder.

By sales volume, the Buffer Autocallable GEARS - S&P 500 (36265J490), which was traded in late April, come up on top as the best-selling product with US$108.2m. The five-year note offers 20% buffer level and an upside gearing of 1.713. The note features only one observation date - 26 April 2024, which will trigger the Autocall option if the closing level of the S&P 500 is greater than or equal to 100% of the strike level.

UBS Financial Services, the third-party distributor, bought the note from Goldman Sachs & Co at the original issue price less a concession of no more than 2.5% of the face amount.

Simon Markets, the US multi-issuer platform for structured products, acts as the external distributor for the other four best-selling notes issued on the GS Finance paper. The platform was acquired by iCapital in 2022.

Among the five best-selling products, the Leveraged Basket-Linked Notes (40057TQ64) is the only structured note that’s not linked to single index, or the S&P 500.  With a 15-month tenor, the product is linked to an unequally-weighted basket comprised of Eurostoxx 50 (36%), Topix Index (Tokyo) (26%), FTSE 100 (17%), Swiss Market Index (SMI) (12%) and S&P/ASX 200 Index (9%). It offers a cap level of 106.12% of the initial basket level and upside participation of 400%.

The S&P 500 accounted for US$6.9 billion principal amount through 2,050 products linked to the single index or index basket issued by GS Finance since 1 January 2023, which translates to 56.5% of the total issuance.

Additionally, one of the callable fixed coupon notes - Callable Fixed Rate Notes (38150AV85) was sold US$160m and equally underwritten by Goldman Sachs & Co and InspereX, the merged firm of Incapital & 280 CapMarkets. With a 10-year tenor, the vanilla bond was issued in late October offering a fixed semi-annual coupon of 7% pa.

Earnings

The banking group led by David Solomon (pictured) reported net revenues of US$46.25 billion for 2023, down two percent, with net earnings at US$8.52 billion, down 24% year-on-year (YoY).

For Q4 23, net revenues increased seven percent to US$11.32 billion and net earnings rose 51% to US$2.01 billion YoY.

During the year, global banking & markets generated net revenues of US$30 billion driven by strong performances in both fixed income, currency and commodities (FICC) and equities.

At the same time, asset & wealth management generated net revenues of US$13.88 billion, including record management and other fees and record private banking and lending net revenues at the US bank.

Diluted earnings per common share (EPS) was US$22.87 for 2023 and was US$5.48 for the fourth quarter while return on average of common shareholders’ equity (ROE) came to 7.5% for 2023 - annualised ROE was 7.1% for the fourth quarter.

Click the links to read the Goldman Sachs's 2023 & Q4 23 results and presentation.