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Goldman Sachs’ profits rose 28 per cent in the first quarter, as a strong performance by its trading business helped it surge past analysts’ estimates.
The US bank said net income for the first three months of the year was $4.1bn, up from $3.2bn a year earlier and almost $1bn ahead of analyst forecasts compiled by Bloomberg.
The performance will help draw a line under a challenging 12 months for Goldman in which its results were hit by losses tied to its pullback from consumer lending.
Chief executive David Solomon, who last year faced criticism for his management of the bank, said the first-quarter results reflected “the earnings power of Goldman Sachs”.
Goldman’s stock was up about 4 per cent in pre-market trading.
Solomon has refocused Goldman’s strategy on its core investment banking and trading businesses and invested in asset and wealth management to generate more stable revenues.
Trading has been a bright spot for the bank in recent years. Market swings during the coronavirus pandemic, the effect of Russia’s full-scale invasion of Ukraine in upending commodities markets and trading of macro products stimulated by central bank interest rate rises have all helped buoy the business.
Buy analysts had expected revenues in Goldman’s equity and fixed-income businesses to fall in the first quarter.
Instead, both reported 10 per cent increases from a year earlier.
Fees from commodities and interest rate product trading fell. However, Goldman said it benefited from higher revenues in mortgages, currencies and credit trading in the quarter.
Investment banking, meanwhile, had its best quarter in two years, with revenues of $2.1bn. This was up 32 per cent from a year earlier, although still well below the peak achieved during the pandemic-era boom in dealmaking.
The market for mergers and acquisitions has finally started to pick up, after a slowdown that has proved far more enduring than many on Wall Street anticipated.
The number of takeovers worth at least $10bn more than doubled in the first three months of 2024.
Strong public market debuts from social media company Reddit and Swiss dermatology group Galderma have also raised hopes for a revival in the global IPO markets after two years of subdued activity.
Goldman’s asset and wealth management division, the cornerstone of Solomon’s efforts to diversify the Wall Street bank away from volatile investment banking and trading, reported revenue of $3.8bn. That was an 18 per cent increase from a year ago.
The bank reported an overall annualised return on equity of 14.8 per cent. The figure, a key industry measure of profitability, was in line with Solomon’s “through-the-cycle” target of 14-16 per cent.