Earnings Results: Goldman Sachs’s stock loses ground as profit tops target but revenue falls short on loan-portfolio adjustment for Marcus unit

Daily Trade

Goldman Sachs Group Inc.’s stock lost ground in premarket trades after the investment bank’s first-quarter revenue fell short of the consensus estimate, while net income beat the Wall Street forecast.

The company’s latest revenue figure included a previously undisclosed loss of about $470 million from the partial sale of the loan portfolio of its Marcus consumer-banking business and the transfer of the remainder of the portfolio to held-for-sale.

Goldman Sachs
GS,
+0.82%

said its first-quarter earnings fell to $3.09 billion, or $8.79 a share, from $3.83 billion, or $10.76 a share, in the year-ago quarter.

First-quarter revenue dipped to $12.22 billion from $12.93 billion.

Analysts expected Goldman Sachs to earn $8.14 a share on revenue of $12.76 billion, according to estimates compiled by FactSet.

Goldman’s results came the same day as Bank of America Corp.
BAC,
+2.88%

reported stronger-than-expected profit and revenue.

CEO David Solomon said the company turned in a “solid” performance despite turmoil in the banking sector in March following the collapse of Silicon Valley Bank
SIVBQ,
-3.63%

and efforts by the banking system to shore up deposits at First Republic Bank
FRC,
+0.15%
.

“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,” Solomon said.

Solomon credited Goldman’s “deeply rooted risk-management culture, strong liquidity and robust capital position” for allowing it to support its clients during the quarter.

Fixed-income net revenue fell 17% to $3.93 billion, which reflected lower net revenue in FICC intermediation. The business also reported lower net revenues in currencies and commodities, partially offset by “significantly higher” interest-rate-product revenue and higher revenue in mortgages and credit products.

Goldman’s $470 million loss from the sale of its Marcus loan portfolio was largely offset by a related reserve reduction of about $440 million in its provision for credit losses.

Global banking and market revenue fell 16% to $8.44 billion. Investment-banking fees fell 26% to $1.58 billion. Revenue in equities fell 7% to $3.02 billion. Asset- and wealth-management revenue rose 24% to $3.22 billion.

Prior to Tuesday’s move, Goldman Sachs’s stock was down 1% in 2023, compared with an 8.1% rise by the S&P 500
SPX,
+0.33%
.

Read on: Bank earnings ‘off to a good start,’ with Bank of America and Goldman Sachs on deck

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