Goldman Sachs reported first quarter earnings Thursday that crushed analyst expectations — even as the bank’s profit dipped 42% year over year.
The Wall Street giant reported a slump in advisory fees as IPOs and mergers slowed sharply from last year’s breakneck pace. That’s despite robust trading revenues that traders racked up as they found ways to profit amid geopolitical uncertainty.
“It was a turbulent quarter dominated by the devastating invasion of Ukraine,” Chief Executive David Solomon said in a statement. “The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill.”
Goldman earned $12.93 billion in revenue and $10.76 earnings per share — far exceeding analyst predictions it would bring in $11.86 billion in revenue and $8.90 earnings per share, according to data from FactSet.
The bank’s total profit was $3.94 billion. Shares were up nearly 2% following earnings.
Goldman, which typically generates a third of its revenue from its investment bank through lucrative fees from advising on deals, brought in $2.41 billion in fees — 36% lower than the first quarter from the year before.
But the disappointing investment banking performance was offset by the bank’s trading revenue which was up 4% from the year before, hauling in $7.87 billion. Fixed income, currency and commodities trading revenue alone brought in $4.72 — up 21% from a year ago.
Citi also reported better-than-expected earnings, though it has set aside $1.9 billion for losses tied to its exposure to Russia. Andrew Kelly/REUTERSJPMorgan, the nation’s largest company reported Wednesday it profit also fell 42% year over year.
Meanwhile, Morgan Stanley reported first quarter earnings of $3.7 billion or $2.04 per share Thursday – much higher than analyst expectations of $1.71 per share, according to data from FactSet. Still, Morgan Stanley was hit by a slowdown in dealmaking, which resulted in profit dropping 11% from the first quarter in 2021 to the first quarter in 2022.
Likewise, Citigroup exceeded Wall Street’s expectations Thursday – bringing in profit of $4.31 billion or $2.02 per share for the first quarter. Analysts predicted the bank would report earnings of $1.43 per share, according to data from FactSet.
Citi, which has more exposure to Russian than any other US bank, saw profits drop 46% year-over-year. The bank has already set aside $1.9 billion for losses linked to Russia’s invasion of Ukraine. Citi initially predicted it could hemorrhage $5 billion but has since revised projected losses downward and now estimates a potential $2.5 billion to $3 billion loss.
And Wells Fargo also bested analyst predictions – the bank made $3.67 billion, or 88 cents per share, in the first quarter — which was more than the 81 cents analysts predicted, according to data from FactSet.
Still, like its peers, Wells Fargo’s profit declined year-over-year. The bank’s earnings dropped 21%.
Both Morgan Stanley and Citi stock were up marginally higher. Well Fargo stock was down marginally on the news.
