UNITED STATES: Goldman Sachs Group Inc.’s profit dropped 19% in the first quarter due to a decline in dealmaking and bond trading, as well as losses from the sale of some loans from its consumer segment. CEO David Solomon’s effort into consumer banking failed, leading to a loss of $470 million on the sale of Marcus loans.
The results were “solid” despite the commotion brought on by bank failures in March, Solomon said in a statement on Tuesday. The first quarter’s events served as a “real-life stress test,” he said, showing how resilient Goldman Sachs and the biggest financial institutions in the country are.
Goldman Sachs’ net profit applicable to common shareholders decreased to $3.09 billion from $3.83 billion in the same period last year, while profits per share decreased to $8.79 from $10.76. Refinitiv IBES statistics showed that the Wall Street titan made $9.87 per share, above the average analyst prediction of $8.10.
In the opening hours of trading, shares decreased 3% to $329.09. Since March 8, when Silicon Valley Bank revealed its attempt to raise capital and sparked a collapse in banking equities, they have lost almost 3% of its value.
Global merger and acquisition activity decreased to its lowest level in more than ten years, leading to a decrease in Goldman’s fees for investment banking. FICC trading revenue fell 17% to $3.93 billion, while equities trading revenue fell 7% to $3.02 billion.
The revenue shortfall versus expectations was due to FICC trading and equity investments. Goldman’s asset and wealth management division saw a 24% increase in revenue to $3.2 billion but a 10% drop from the year-end. The first quarter saw a 5% decline in net revenue to $12.22 billion.
Goldman Sachs reorganised its business divisions in 2022, focusing on trading and investment banking, asset management, and consumer-focused ambitions. Bank of America Corp (BAC.N) released profits above analysts’ expectations following the strongest quarter for bond traders in ten years.
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