Goldman Sachs has announced a 15% increase in its profit for the first quarter, attributed to heightened market volatility that led to record revenues in equity trading, alongside a boost in fixed income results.
The investment bank has joined peers JPMorgan Chase and Morgan Stanley in reporting improved profits. However, investor attention has shifted toward economic forecasts, which are becoming uncertain due to potential tariffs that might escalate inflation and trigger a recession.
According to Goldman’s report on Monday, profit surged to $4.74 billion, translating to $14.12 per share, for the three-month period ending March 31. This figure marks an increase from the $4.13 billion, or $11.58 per share, reported the previous year.
“As we head into the second quarter, we are operating in a notably different environment compared to earlier this year, yet we remain optimistic about our ability to support our clients,” stated CEO David Solomon.
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In response to the volatile market, Goldman experienced a remarkable 27% increase in equities trading revenue, which climbed to an unprecedented $4.2 billion, as investors restructured their portfolios to mitigate potential impacts from new tariffs.
Additionally, revenue from fixed income, currency, and commodities trading rose by 2%, reaching $4.4 billion. Before the market opened, Goldman Sachs shares increased by 2.5%, bringing the price to $507.
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Nonetheless, a cautious approach from corporate clients may hinder growth in the upcoming months as businesses adapt to the toughest trade barriers seen in over a century.
Initial public offerings have not shown significant recovery, with the S&P 500 index falling roughly 9% year-to-date, and mergers and acquisitions remaining sluggish.
Goldman’s investment banking fees experienced an 8% decrease, totaling $1.9 billion during the reporting period.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GS | THE GOLDMAN SACHS GROUP INC. | 494.44 | +4.64 | +0.95% |
| JPM | JPMORGAN CHASE & CO. | 236.13 | +9.01 | +3.97% |
| MS | MORGAN STANLEY | 108.12 | +1.54 | +1.44% |
This shift highlights a notable change in sentiment within a sector that had been optimistic just a few months ago with Donald Trump’s renewed presidency.
Goldman Sachs’ stock has dropped 12% since tariffs were announced earlier this month, whereas JPMorgan and Morgan Stanley have decreased by 4% and 9%, respectively.
Concerns had emerged even prior to the recent downward trend. Brokerage firm Oppenheimer downgraded Goldman’s stock in March, cautioning that the current administration’s aggressive trade policies could adversely affect numerous firms dependent on capital market activities.
Additionally, the bank’s asset and wealth management segment saw a 3% decline in revenue, amounting to $3.68 billion, despite managing a record of $3.17 trillion in assets in the first quarter.
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An executive from Goldman’s asset division characterized the tariffs as a “growth shock,” and the bank’s economists fluctuated their predictions for the likelihood of a recession following the announcement and subsequent delay of the U.S. tariffs.
Goldman also set aside $287 million for credit loss provisions, a reduction from the $318 million allocated the previous year.
HIGH PAY, HIGHER SCRUTINY
CEO David Solomon received an $80 million stock bonus to secure his leadership for another five years, while President and Chief Operating Officer John Waldron, viewed as a potential successor, was awarded a similar retention bonus in restricted stock.
This decision marks a significant turnaround for the management team, which faced criticism following expensive missteps in consumer banking. After incurring considerable losses, the bank has shifted its focus back to traditional strengths in investment banking and trading.
However, the generous compensation packages are drawing scrutiny, with proxy advisory firms Institutional Shareholder Services and Glass Lewis encouraging investors to reject the bonuses, complicating efforts by the board to retain talent following a wave of executive departures.
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Goldman’s annual shareholder meeting is set for April 23, where shareholders will cast votes on various proposals, including the contentious issue of executive pay.
While the results of the vote may not be binding, they often influence board decisions moving forward.
