By Saeed Azhar and Niket Nishant
New York (Reuters) -Goldman Sachs defeated the first quarter of profit, because her traders used the volatile markets to generate income from record shares, but warned the CEO of the bank about a difficult environment.
The Wall Street Bank joined Rivals JPMorgan Chase and Morgan Stanley in reporting higher profit, but investors are more focused on future projections as the rates increase inflation and recession risks.
“While we enter the second quarter with a clearly different operational environment than earlier this year, we continue to trust our ability to continue to support our customers,” said CEO David Solomon, who noticed the “great uncertainty” that hung about markets in the first quarter.
Goldman’s profit rose by 15% to $ 4.74 billion, or $ 14.12 per share, ending for the three months on March 31, the bank said Monday.
The average estimate of the analysts for income was $ 12.35 per share, according to data collected by LSEG. The bank shares rose 1% to $ 499.26.
Turbulent markets increased Goldman’s share income by 27% to a record of $ 4.2 billion while investors are scrambling to re -make their portfolios to reduce the hit of the new rates.
The income from fixed -income income, currency and raw materials increased by 2% to $ 4.4 billion.
Investment banking, however, fell by 8% to $ 1.9 billion in the quarter due to lower consultancy costs.
The first public offers still have to recover usefully. The Benchmark S&P 500 Index has so far fallen around 9% and mergers and acquisitions remain modest.
“Our customer dialogues remain raised and our backlog is in the fourth consecutive quarter,” said Solomon, referring to deal discussions. “That said, our ability to carry out these transactions will of course be dependent on market conditions.”
Current policy uncertainty and market volatility ask customers to move their portfolios, stimulating higher trading activities, he added.
The shift underlines a dramatic change in sentiment for a sector that had celebrated the return of US President Donald Trump to the White House until just a few months ago.
“I don’t think investment banking is dead,” says Chris Marinac, director of research at Janney Montgomery Scott. “It will just be slower, and it will certainly not be that robust.”
Solomon is moving that the radical economic policy of the administration is moving and outlined how the US benefited from the trade and the role of the dollar as a reserve currency.
“The focus of the administration on trade barriers and strengthening the American competitive position is commendable,” he said. But it was important to note that the few “benefited more from the two economic and financial order than the United States after the Second World War.”
The Goldman shares have fallen by 12% since the rates were unveiled earlier this month, while rival JPMorgan and Morgan Stanley are 4% and 9% lower respectively.
But concern had already emerged before the last slide. Brokerage Oppenheimer reduced the shares of Goldman in March and warned that the aggressive efforts of the Trump administration to increase global trade standards could touch a whole series of companies that were dependent on the activities of capital markets.
Asset & Wealth Unit Hapert
The income from Goldman’s asset and wealth management, the unit that is suitable for institutions and high net-worthy individuals, decreased by 3% to $ 3.68 billion due to losses on stock and debt investment.
The assets of the bank under supervision climbed to a record of $ 3.17 trillion. It has worked to turn the unit into a steady income flow that is relatively insulated from wild market fluctuations.
A director of the Goldman Asset Division said earlier this month that the rates were a ‘growth box’.
The results of the first quarter of the bank come months after Solomon received a share bonus of $ 80 million to stay at the helm for another five years.
President and Chief Operating Officer John Waldron, generally considered the successor to Solomon, also received a retention bonus of $ 80 million in limited shares.
There has been pushback from skeptics who consider compensation as excessive. Proxy advisers Institutional Shareholder Services and Glass Lewis have called on investors to reject prices, so that the efforts of the board to maintain top talent after an executive exodus complicate in recent years. Shareholders will vote on the proposals during the annual shareholders’ meeting of Goldman on 23 April.
Separately, Goldman added only 100 people to his ranks in the course of the quarter. Reuters reported last month that the bank intended to reduce the staff as part of an annual performance assessment.
As part of the cutbacks, it expects a severance payment of $ 150 million in the second quarter, CFO Denis Coleman analysts said during a call.
Goldman has also reserved $ 287 million in provisions for credit losses, compared to $ 318 million last year. The provisions were usually related to the credit card portfolio.
The bank has said that her credit card partner can end with Apple before her contract rises in 2030. JPMorgan, Synchrony Financial and Barclays are driven as potential candidates to replace Goldman, Reuters has previously reported.
Goldman also approved a $ 40 billion stock buying program in the quarter.
(Reporting by Niket Niket Niket Niket Nishhant in Bengaluru and Saeed Azhar in New York; Edit by Lanan Ngyen, Shounak Dasgupta and Sharon Singleton)
