Goldman Sachs Q1 Profit Down, Yet Beats; Topline Misses View


Goldman Sachs Group Inc. reported Tuesday lower profit in its first quarter as revenues were hurt mainly by weak performance in Global Banking & Markets. Earnings per share, however, beat market estimates, while topline missed view.

In pre-market activity on the NYSE, the banking major’s shares were losing around 3.5 percent to trade at $327.90.

Citing the weak results amid the banking industry turmoil, David Solomon, Chairman and Chief Executive Officer, said, “The events of the first quarter acted as another real-life stress test, demonstrating the resilience of Goldman Sachs and the nation’s largest financial institutions…. We are operating from a position of strength and remain focused on executing our strategy to further grow our leading Global Banking & Markets and Asset & Wealth Management franchises.”

On April 14, the Board of Directors declared a dividend of $2.50 per share to be paid on June 29 to shareholders of record on June 1.

The company’s first-quarter net earnings applicable to common shareholders fell 19 percent to $3.09 billion from $3.83 billion last year. Earnings per share were $8.79, down 18 percent from prior year’s $10.76.

Analysts on average had expected the company to earn $8.10 per share, according to figures compiled by Thomson Reuters. Analysts’ estimates typically exclude special items.

Sequentially, net earnings surged 161 percent from $1.19 billion or $3.32 per share recorded in the preceding fourth quarter.

Provision for credit losses was a net benefit of $171 million for the first quarter, compared with net provisions of $561 million a year ago. Total operating expenses increased 9 percent from last year to $8.40 billion.

The company’s net revenues for the first quarter fell 5 percent to $12.22 billion from $12.93 billion a year ago. Net revenues, however, grew 15 percent sequentially.

Analysts expected net revenues of $12.79 billion for the first quarter.

The company attributed the decrease in net revenues mainly to lower results in Global Banking & Markets, partially offset by significantly higher net revenues in Asset & Wealth Management and Platform Solutions.

Net revenues in Global Banking & Markets were $8.44 billion, 16 percent lower than last year. In the quarter, investment banking revenues declined 26 percent, net revenues in FICC were 17 percent lower and in Equities were 7 percent lower.

Net revenues in Asset & Wealth Management, however, gained 24 percent from last year to $3.22 billion.

Net revenues included a loss of around $470 million related to a partial sale of the Marcus loans portfolio and the transfer of the remainder of the portfolio to held for sale.

Total non-interest revenues dropped 6 percent to $10.44 billion from prior year’s $11.11 billion. Net interest income fell 3 percent year-over-year to $1.78 billion.

Market making revenues fell 10 percent, while Investment management revenues went up 11 percent and Commissions and fees grew 8 percent.

All regions of Americas, EMEA and Asia recorded weak net revenues in the quarter.

Total assets Under Supervision as of March 31 were $2.67 trillion, up from $2.39 trillion in the same period a year ago.

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