TLDR
- Goldman Sachs reported Q1 profit rose 15% to $4.74 billion ($14.12 per share)
- Record equities trading revenue jumped 27% to $4.2 billion
- Investment banking fees fell 8% to $1.9 billion
- CEO David Solomon warned of “great uncertainty” in markets
- Goldman shares rose 1-2.5% in premarket trading
Goldman Sachs posted strong first-quarter results as traders took advantage of volatile markets. The bank’s profit jumped 15% to $4.74 billion, or $14.12 per share, beating analyst expectations of $12.33 per share.
The Wall Street giant’s shares rose between 1% and 2.5% in premarket trading to around $500.30.
Market turbulence proved to be a double-edged sword for Goldman. While investment banking suffered, the trading business thrived.
Equities trading revenue soared 27% to a record $4.2 billion as investors scrambled to adjust their portfolios. This marked an all-time high for the bank’s equities business.
Fixed income, currency, and commodities trading revenue increased by 2% to $4.4 billion compared to the same period last year.
Market Uncertainty Clouds Outlook
CEO David Solomon struck a cautious tone despite the strong results. “While we are entering the second quarter with a markedly different operating environment than earlier this year, we remain confident in our ability to continue to support our clients,” Solomon said.
He noted the “great uncertainty” that loomed over markets during the first quarter.
The bank’s performance mirrors that of rivals JPMorgan Chase and Morgan Stanley, which also reported higher profits.
Investor focus has shifted to economic projections, clouded by concerns that new tariffs could spark inflation and potentially trigger a recession.
Goldman’s stock has fallen 12-14% since the tariffs were announced earlier this month. Competitors JPMorgan and Morgan Stanley have dropped 4% and 9% respectively.
Investment Banking Slowdown
Not all segments performed well. Investment banking fees declined 8% to $1.9 billion due to lower advisory fees. M&A activity remains subdued, and initial public offerings have yet to recover meaningfully.
Advisory revenue specifically fell 22% compared to the same period in 2024.
“I don’t think investment banking is dead. It’s just going to be slower, and certainly it’s not going to be as robust,” said Chris Marinac, director of research at Janney Montgomery Scott.
The S&P 500 index has dropped around 9% so far this year, dampening deal-making enthusiasm.
Revenue at Goldman’s asset and wealth management arm fell 3% to $3.68 billion, affected by losses on equity and debt investments.
The bank now supervises a record $3.17 trillion of assets, highlighting its growing presence in the wealth management space.
Goldman set aside $287 million in provisions for credit losses, down from $318 million last year.
Executive Compensation Draws Scrutiny
CEO David Solomon was awarded an $80 million stock bonus to stay at the helm for another five years. President and Chief Operating Officer John Waldron received an identical retention bonus.
This marks a striking reversal for the management team, which had faced criticism after costly missteps in consumer banking. The bank has since refocused on its traditional strengths in investment banking and trading.
The compensation packages have drawn pushback from critics who view them as excessive. Proxy advisers Institutional Shareholder Services and Glass Lewis have urged investors to reject the awards.
Shareholders will vote on several proposals, including executive pay, at the annual meeting scheduled for April 23. While the outcome isn’t binding, boards typically consider these votes in future decisions.
Goldman added just 100 employees in the quarter. Reports suggest the bank is planning to trim staffing as part of an annual performance review.
The banking giant’s results reflect the rapidly changing economic landscape under the Trump administration. Early optimism about growth through deregulation has been overshadowed by trade policy uncertainty.
President Trump’s battles over tariffs with China, Mexico, and other trading partners have depressed stock prices and roiled bond markets.
Wall Street was initially eager for the new administration to boost economic growth by reducing regulation and cutting corporate taxes. However, recent policy shifts have dampened that enthusiasm.
For now, market volatility has benefited Goldman’s trading business, offsetting weakness in other areas like investment banking and wealth management.
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