Goldman Sachs Sinks On Downbeat Trading Revenue


Goldman Sachs Group Inc.  delivered upbeat first quarter earnings before markets opened on Monday. Total revenue, however, fell short of expectations as tougher market conditions hit two of the bank’s biggest divisions. Investment banking revenue was flat in the quarter, while trading revenue dipped 18%.

As expected, the bank’s board of directors voted to boost quarterly dividend by $0.05 to $0.85 per share. Shares of the company were down $3.94, or 1.90% to $203.90 in pre-market trade. The stock has gained more than 24% since the beginning of the year through Friday.

GS Earnings & Outlook

Goldman Sachs posted net income of $2.18 billion, or $5.71 per share, down from $2.74 billion, or $6.95 per share, in the prior-year period. On average, analysts polled by Refinitiv were expecting the bank to report adjusted earnings of $4.89 per share.

Companywide revenue, the company said, came to $8.81 billion compared with $10.08 billion. Analysts had called for revenue of $8.9 billion based on figures compiled by Refinitiv. Revenue from Institutional Clients Services came to $3.61 billion in the quarter compared with $4.39 billion in prior-year period, and below analysts’ estimate of $3.69 billion.

Goldman Sachs’ Investing and Lending segment generated revenues of $1.84 billion, down 14% year-over-year and below estimates of $1.87 billion. Revenue from investment banking unit was pegged at $1.81 billion, beating expectations of $1.65 billion.

Investment Management division brought in revenues of $1.56 billion, down 12% and below Refinitiv consensus of $1.71 billion. The company blamed the drop on significantly lower incentive fees and lower transaction revenues.

Net revenues for Fixed Income, Currency and Commodities declined 11% year-over-year to $1.84 billion. Goldman Sachs said the drop was caused by lower net revenues in interest rate products, currencies and credit products.

Equities trading revenue came to $1.77 billion, down 24% from the prior-year period mainly due to lower net revenues in equities client execution. Commissions and fees were impacted by lower trading volumes.

Goldman Sachs CEO Comments

“We are pleased with our performance in the first quarter, especially in the context of a muted start to the year. Our core businesses generated solid results driven by our strong franchise positions. We are focused on new opportunities to grow and diversify our business mix and serve a broader range of clients globally. With improving momentum across our businesses, we are confident that Goldman Sachs will generate attractive returns for our shareholders,” commented Goldman Sachs CEO David M. Solomon.

Goldman Sachs Profile

Goldman Sachs is a global investment banking firm whose activities are organized into investment banking, institutional client services, investing and lending, and investment management segments. Approximately 60% of the company’s net revenue is generated in the Americas, 15% in Asia, and 25% in Europe, the Middle East, and Africa. In 2008, Goldman reorganized itself as a financial holding company regulated by the Federal Reserve System.