Goldman Sachs (GS) beat fourth-quarter earnings results, while simultaneously posting the bank's lowest annual profit since 2019. Morgan Stanley's (MS) reported fixed-income and equities trading revenue fell short of Wall Street expectations, overall beating top-line forecasts.

Many on Wall Street look towards bank earnings as an outlook for the remainder of the year and while these results were disappointing for some, is there more to the story?

HSBC Head of US Financials Research Saul Martinez, joins Yahoo Finance to discuss what bank earnings indicate for the broader market narratives.

Martinez discusses these earnings results: "Goldman's outlook and Goldman's results, I would say would reenforce the turnaround and the transformation that they're seeing where they're looking to reconfigure their asset wealth management business where they're reducing losses in the consumer business and continuing to gain share and position themselves well for a rebound in investment banking, whereas Morgan Stanley showed that wealth management, which is a big driver for them, still faces some challenges..."

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

- Welcome back. Goldman Sachs and Morgan Stanley out with earnings this morning. Goldman beating Wall Street expectations, capping a year of transition for the bank. Earnings surged 51% during the fourth quarter driven by a jump in its equities trading division. But for the year, it was a different story. The bank posted its lowest annual profit since 2019, and we got a disappointing report from Morgan Stanley, fixed income and equities trading revenue.

That fell short of forecasts, and the Bank warned of lower margins in its wealth business. Here to break it all down, we've got Saul Martinez who is the HSBC head of US financials. Great to have you here with us, Saul. Help us perhaps paint a broad stroke on the bank earnings that we've seen come forth so far, and what does that say about the setup for the rest of this earnings season?

SAUL MARTINEZ: Yeah, well, thank you for having me. I think you do have to distinguish between the commercial and universal banks and the investment banks. But I think, in general, this earnings season is less about the quarterly results themselves and more about what the results and what management teams are saying about the outlook for 2024, and, really, it's about-- if you had to encapsulate it, it's really about revenue growth and the return-to-revenue growth. So we obviously had Goldman and Morgan Stanley today. We also had JP Morgan, Bank of America, Citigroup, and Wells on Friday, and P&C today as well.