(Bloomberg) — Goldman Sachs Group Inc. equities traders posted a decline in the fourth quarter, adding to evidence that the frenzied activity touched off by the pandemic is cooling, even as the bank ratcheted up payouts for employees. The company’s shares tumbled.

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Revenue from the bank’s trading operation slid 7%, missing analysts’ estimates for a small gain. The surprise letdown came from its equities business, which declined 11%, according to a statement Tuesday. Despite rounding off their best year ever for both revenue and earnings, Goldman executives will need to address investor concerns that the trading business is on a downward trajectory.

Compensation and benefits, the single biggest driver of expenses at Goldman, jumped 33% to $17.7 billion in 2021, an indication of big rewards for employees after a record year.

Top executives at JPMorgan Chase & Co. and Citigroup Inc. last week took turns lowering expectations for Wall Street profit this year after posting bigger-than-expected declines in trading for the last three months of 2021. JPMorgan shares dropped 6.2% on Friday, their biggest drop in more than 18 months.

The trading boom set off by the market volatility of Covid-19 might be starting to fade, and companies are having to contend with higher costs to prevent employees from defecting. That leaves bank leaders with the task of resetting expectations.

Goldman shares slid 8.4% to $349.12 at 9:42 a.m. in New York, their biggest intraday decline since June 2020. The stock was one of the pandemic’s success stories, climbing 45% last year. But investors have already turned their attention to how the New York-based firm will fare in calmer markets, with the price plateauing in recent months and trading below levels set in June.

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The company’s earnings call will mark the public debut of Denis Coleman III as chief financial officer. Coleman previously led the global financing group and replaces Stephen Scherr, who held the position for more than three years.

In a time when competition for talent and pay pressures have become major themes, Goldman is rewarding its partners — roughly 400 executives — with a special one-time award, Bloomberg reported last week. That payout will be in addition to their typical cash and bonus compensation, which ranges from a few million dollars to multiples of that after a year of record earnings.

Investment-banking revenue of $3.8 billion beat analysts’ average estimate of $3.07 billion. That was driven by its merger-advisory business as well as debt underwriting, which climbed 80% from a year earlier. Dealmakers at the firm, which has dominated in a year of merger mania, will be among the biggest beneficiaries of ballooning pay. Executives have mulled boosting the bonus pool for investment banking by as much as 50%.

Goldman’s asset-management business, which includes its alternatives-investing platform, had revenue of $2.89 billion, down 10% from a year earlier. The decrease was driven by lower revenues on equity investments as well as in lending.

Revenue at the bank’s consumer and wealth business rose 19% to almost $2 billion. Earlier this month, Goldman announced a new credit card with General Motors Co., adding another Main Street brand to the line-up. The agreement is Goldman’s second major co-brand deal, following the launch of a high-profile credit card with Apple Inc. in 2019.

Provisions for credit losses jumped 44% tied to growing card balances as well as those related to the General Motors portfolio.

Also in the fourth-quarter results:

  • Net income fell 13% to $3.94 billion, or $10.81 a share. Adjusted earnings were expected to total $11.65 a share, according to the average estimate in a Bloomberg survey.

  • Companywide revenue totaled $12.6 billion, compared with an average estimate of $12 billion.

  • Debt-underwriting revenue gained 80% to $948 million, while the firm pulled in $1.03 billion from equity underwriting, down 8% from a year earlier.

(Updates share price starting in first paragraph.)

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