Exceeding expectations: Goldman Sachs profits increased 28% compared to the same period last year
Goldman Sachs’ profits rose to a better-than-expected £3.3bn in the first quarter of the year, thanks to the revival of its investment banking division.
The 28 percent increase compared to the same period last year was helped by a revival in trading fees as well as a strong period for bond trading.
Investment banking has been Goldman’s mainstay, but it has declined in recent years.
And chief executive David Solomon has come under heavy criticism for an ill-fated foray into consumer banking that cost him billions.
Yesterday, Solomon said the bank was “focusing on our core strengths to serve our customers.”
Chris Kotowski, an analyst at brokerage Oppenheimer, said the results were a “near perfect impression” and that most earnings metrics performed better than expected.
Wall Street rivals JP Morgan and Citigroup also signaled improving trading conditions when they also posted better-than-expected results last Friday.
Solomon said: “We are in the early stages of a reopening of the capital markets.”
He noted growing investor appetite for stock listings, as well as strong activity in debt underwriting for deals.
Leading M&A advisor Goldman handled some of the biggest deals of 2023, including oil giant Exxon Mobil’s £48bn purchase of Pioneer Natural Resources.
And Solomon predicted more could follow as private equity firms look to come on board.
“I think the pace is going to accelerate,” he said.
Solomon was also optimistic about broader growth, saying, “We remain constructive on the health of the U.S. economy.”
It comes as the United States heads toward a so-called “soft landing” after the country’s central bank, the Federal Reserve, raised interest rates to cool inflation without causing a slowdown in growth.