Leading US investment bank Goldman Sachs kicked off bank earnings season with a solid, but mixed quarter. Its equity traders posting a second consecutive all-time record, surpassing their own previous high by more than $1 billion as Iran war-driven volatility turbocharges Wall Street’s trading desks. However, a miss by the FICC division saw the stock slip lower overnight.
FIRST QUARTER RESULTS
- Equities sales & trading revenue $5.33 billion, estimate $4.9 billion.
- FICC sales & trading revenue $4.01 billion, estimate $4.87 billion.
- Net revenue $17.23 billion, +14% y/y
- Net interest income $3.56 billion, +23% y/y, estimate $3.52 billion (Bloomberg Consensus)
- Total operating expenses $10.43 billion, +14% y/y, estimate $10.35 billion
- Annualized ROE +19.8%, estimate +18.7%
The stocks division, comfortably cleared the $4.31 billion record set just last quarter, an extraordinary run that reflects both the surge in market volatility and Goldman’s dominant positioning in equities financing, which includes lending to large hedge funds and other speculative investors. The record came despite the high-profile departure of equities co-head Erdit Hoxha to Millennium Management mid-quarter, a distraction that clearly didn’t slow the desk down. FICC was the one soft spot, coming in at $4 billion and missing analyst expectations, though the broader revenue picture compensated for this shortcoming. Investment banking advisory fees were the other standout, up 89% year-on-year, as dealmaking stages a meaningful recovery after an extended drought. With Goldman first out of the blocks among the major investment banks this week, it has set the standard, and underscored why it’s equities franchise, one of the largest on Wall Street, is built precisely for environments like this one.
- We believe Goldman will recover from the small hiccup overnight to re-test the $US1,000 area in 2026.
