Equities

Goldman Sachs Q1 Earnings Up 28%, Hits $4.13B with Deals

Goldman Sachs beats Q1 2024 earnings with a 28% net income jump, driven by trading and dealmaking resurgence.

By Bill Bullington

4/15, 14:01 EDT
Goldman Sachs Group, Inc.
JP Morgan Chase & Co.
article-main-img

Key Takeaway

  • Goldman Sachs' Q1 2024 earnings surged by 28%, with net income at $4.13 billion, driven by strong trading and banking sectors.
  • Trading revenue outperformed expectations, especially in fixed-income, currencies, and commodities; banking saw a rise to $2.08 billion.
  • Asset and wealth management revenues grew 18% to $3.79 billion, highlighting a strategic shift towards fee-based growth.

Surprising Earnings Growth

Goldman Sachs Group Inc. reported a significant increase in earnings for the first quarter of 2024, surpassing analysts' expectations with a 28% jump in net income. This growth was primarily driven by its trading and banking sectors, which benefited from a resurgence in dealmaking activity and trading performance that outpaced its main competitor, JPMorgan Chase & Co. The firm's return to its core Wall Street operations and a strategic shift away from its retail banking endeavors contributed to this success. Goldman Sachs' return-on-equity (RoE) for the first quarter stood at 14.8%, aligning with its long-term targets and marking a substantial improvement from the 7.5% recorded in 2023. The reported net income was $4.13 billion, or $11.58 a share, on $14.21 billion in revenue, with Goldman shares experiencing a notable increase of up to 6% in early trading.

Trading and Banking Success

The firm's fixed-income traders, including those in currencies and commodities, generated $4.32 billion in revenue, defying expectations of a decline and showcasing the strength of Goldman's trading operations. This performance was particularly strong in mortgages and structured lending. Equity-trading revenue also exceeded forecasts, reaching $3.31 billion, as Goldman Sachs aims to solidify its position as the leading stock-trading franchise. On the banking side, investment-banking revenue hit $2.08 billion, with merger advisory fees and equity-capital business revenues surpassing analyst estimates. Despite a decrease in the deals backlog compared to the previous quarter, the firm's banking and trading groups demonstrated robust performance.

Asset and Wealth Management Growth

Goldman Sachs' asset- and wealth-management business saw an 18% increase in revenue from the previous year, totaling $3.79 billion. Management fees rose by 7%, indicating a strategic pivot towards generating growth through these fees rather than relying on balance-sheet investments, which have historically contributed to earnings volatility. The firm successfully reduced its principal investments to below $15 billion, meeting a previously set target. Fundraising for private market investments reached $14 billion for the quarter, with total assets under supervision climbing to $2.85 trillion. The credit sector emerged as the primary beneficiary, accounting for half of the alternative funds raised during the period.

Management Quotes

  • David Solomon, CEO of Goldman Sachs:

    "Goldman’s own targets for RoE for that segment remained in the mid-teens 'through the cycle'."