Goldman Sachs profits have fallen 19% year-on-year in the first quarter of the year, the bank reported on Tuesday. They went from 3,830 million dollars (3,490 million euros) to 3,234 million dollars (2,900 million euros) between January and March, while earnings per share fell to 8.79 dollars (8.01 euros) from 10, 76 dollars (9.81 euros) from last year. The poor performance stems from the investment banking giant’s cutting fees, while a partial sale of its consumer unit Marcus’ loan book also weighed on results.
Global M&A activity slowed to its lowest level in more than a decade in the first quarter of 2023, according to Dealogic data. That affected Goldman’s investment banking income by 26%, which fell to 1,580 million dollars (1,440 million euros). Net income in the quarter has fallen 5% to 12.220 million dollars (11.130 million euros) and includes a loss of around 470 million (428 million euros) related to a partial sale of Marcus’ loan portfolio while that keeps the rest of the portfolio for sale, as reported by the company. Revenues have been below the forecasts that were 12,800 million dollars (11,670 million euros).
Income from fixed income, currency and raw materials operations, which are usually a positive point, have also fallen 17% to 3,930 million dollars (3,580 million euros), below expectations and behind JPMorgan and Citigroup, which reported increases. In parallel, income from variable income operations fell by 7% to 3,020 million dollars (2,751 million euros).
Goldman is also changing its strategy after a foray into consumer banking, which Chief Executive David Solomon had championed for years, failed. According to the entity’s board of directors, the bank is exploring strategic options for its consumer arm, which lost around 3,000 million (2,733 million euros) in three years. The bank reshuffled its businesses last year, building on its traditional pillars of trade and investment banking, bolstering its asset management arm and withdrawing from its consumer aspirations.
“The events of the first quarter acted as another real-life stress test, demonstrating the resilience of Goldman Sachs and the country’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 and Markets and Asset and Wealth Management franchises,” CEO David Solomon said in a statement.
The bank’s shares have fallen 3.6% to $327.65 in premarket trading. Until the latest close, they have lost nearly 3% since March 8, when Silicon Valley Bank unveiled its bid to raise capital, triggering a crisis in bank stocks.
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