Goldman Sachs results hit by trading and dealmaking slowdown

Goldman Sachs reported an 18 per cent year-on-year drop in net income for the first quarter, weighed down by a slowdown in dealmaking and underperformance at its trading business.

Goldman on Tuesday said net income for the first three months of the year was $3.2bn, or $8.79 per share, down from $3.8bn, or $10.76 per share in the same period last year. This still beat analysts’ estimates of $3.06bn, or $8.23 per share, according to consensus data compiled by Bloomberg.

But revenues were down 5 per cent at $12.2bn, missing forecasts of $12.8bn. Goldman lost $470mn from a partial sale of its consumer loan portfolio at its Marcus business as well as the remainder of the portfolio being made available for sale, resulting in the assets being marked down.

This was offset in the bank’s profits by a $440mn release of credit reserves set aside to cover for potential loan losses.

Goldman’s trading business, which has benefited from volatile financial markets during the pandemic, aggressive rate rises by central banks and Russia’s war with Ukraine, reported revenue of $6.9bn for the first three months of the year, short of analysts’ forecast of $7bn.

Revenue from Goldman’s fixed income, currencies and commodities trading was $3.9bn, missing expectations of $4.2bn and lagging behind JPMorgan Chase and Citigroup which reported increases in fixed income trading revenues. Goldman’s revenue from equities totalled $3bn, beating analysts’ forecasts of $2.8bn. 

In March, the Goldman trading desk that handles interest-rate products lost about $200mn in the market upheaval following the collapse of Silicon Valley Bank, the Financial Times reported.

Revenue from investment banking at Goldman in the first quarter was down 26 per cent to $1.58bn, ahead of analysts’ estimates of $1.47bn. Rivals JPMorgan and Citi last week reported declines of 24 per cent and 25 per cent in investment banking revenue, respectively.

Goldman’s shares were down about 3.5 per cent in pre-market trading in New York.