• Firm’s profit soars 27%, bucking analyst expectations of a drop
• Fixed-income revenue surpasses even the most optimistic estimates

Goldman Sachs experienced a 27%^[1] increase in net income compared to the previous year, defying analysts’ expectations of a decline.

Robust results in investment banking and an expanding asset management division for wealthy clients boosted the Wall Street giant’s bottom line.

Source: Company Filings

The earnings included a $78 million charge due to an extra Federal Deposit Insurance Corp. assessment linked to regional bank collapses last year.

Nonetheless, net income reached $4.13 billion^[2], or $11.58 per share, surpassing the expectations for the first quarter of 2024.

Revenue climbed to $14.2 billion from the previous year, fueled by a 32% increase in investment banking fees. Additionally, asset and wealth management revenue grew by 18% to $3.79 billion.

Fixed-income trading exceeded forecasts with $4.32 billion in revenue despite anticipated declines from mortgages and structured lending.

Furthermore, equity trading revenue rose to $3.31 billion, exceeding expectations as the firm aims to solidify its position as the leading stock-trading entity.

Investment banking revenue reached $2.08 billion, surpassing the analysts’ forecast of $1.82 billion. Merger advisory fees also exceeded expectations at $1.01 billion.

The firm’s equity-capital business generated $370 million, buoyed by an increase in public stock offerings, while debt-underwriting revenue was $699 million. The company noted a decrease in its deal backlog from the previous quarter.

With ongoing high inflation due to a robust economy, it is anticipated that the Federal Reserve will maintain high-interest rates. As a result, corporate bond yields are rising, leading to reduced expectations for rate cuts this year and potentially lower fee income from debt issuance moving forward.

Goldman’s asset and wealth management division reported revenue of $3.79 billion, an 18% jump from the previous year.

Management fees grew by 7%, reflecting the bank’s strategy to focus on sustainable fee-based revenue rather than sporadic gains from balance sheet investments.

The firm also raised $14 billion for investments in private markets during the quarter, with total assets under management escalating to $2.85 trillion.

⁠Goldman’s stock climbed 3%^[3].⁠

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1. Company data
2. Company data
3. Tradingview