Goldman’s profit beats strength in wealth management and trading

The Goldman Sachs logo is seen on the floor of the New York Stock Exchange (NYSE) in New York, New York, U.S. November 17, 2021. REUTERS/Andrew Kelly/File Photo

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April 14 (Reuters) – Goldman Sachs Group Inc (GS.N) reported a 43% drop in profits but beat Wall Street expectations on Friday, as strong performance in its wealth management and trading businesses offset by part a decline in stock subscription as stock market listings dried up.

Wall Street banks have come under pressure amid a global trading slump, but volatility fueled by concerns over interest rate hikes and the economic fallout from the war in Ukraine has helped Goldman’s trading desks to shatter expectations.

The bank’s global markets segment recorded net income of $7.87 billion, a 4% jump from a year ago, when the US Federal Reserve’s accommodative monetary policy led to levels of exceptional trading activity. The strong performance was driven by a 21% increase in fixed income revenue, the bank said.

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The Wall Street bank has also taken steps under Chief Executive David Solomon to diversify its revenue streams and earn more from predictable sources such as consumer banking, wealth and asset management.

Consumer and Wealth Management reported a 21% rise in net revenue to $2.10 billion, helped by higher management fees and credit card balances.

Investment banking revenue, however, fell 36% to $2.41 billion as advisory fees on IPOs and debt underwriting fell amid heightened tensions between Russia and the United States. Ukraine.

“It was a turbulent quarter dominated by the devastating invasion of Ukraine,” Solomon said. Goldman was the first major US bank to pull out of Russia.

“The rapidly changing market environment had a significant effect on client business as risk intermediation took over and equity issuance came to a virtual standstill,” Solomon added.

Goldman’s revenue from advising on the deal was largely unchanged at $1.13 billion, in stark contrast to rival Morgan Stanley, whose business revenue doubled.

As the U.S. Federal Reserve began to wean the economy off pandemic-era support, trading slowed in the quarter and cast a pall over some of Goldman’s most lucrative businesses.

Goldman also cut operating expenses by 18% in the quarter, primarily due to lower compensation and benefits spending.

The bank posted earnings applicable to common shareholders of $3.83 billion, or $10.76 per share, in the first quarter. Analysts had expected $8.89 per share, according to Refinitiv data.

Total net income fell to $12.93 billion in the quarter, down nearly 27% from a year ago.

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Reporting by Niket Nishant in Bengaluru and Matt Scuffham in New York; Editing by Arun Koyyur

Our standards: The Thomson Reuters Trust Principles.

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