Goldman Sachs Group Inc.’s first-quarter profit fell 19 percent as sluggish dealmaking eroded the Wall Street giant’s fees from investment banking, while losses from the sale of some loans from its consumer unit, Marcus, weighed on the results.
Goldman booked a $470 million loss on the sale as the bank rejigs its strategy after a foray into consumer banking, which Chief Executive David Solomon had championed for years, flopped.
It is also exploring strategic options for its consumer platform business, which has lost about $3 billion in three years, executives told investors in February.
Goldman reshuffled its businesses last year, leaning into its traditional mainstays of trading and investment banking, beefing up its asset management arm and stepping back from its consumer aspirations.
“The events of the first quarter acted as another real-life stress test,” CEO Solomon said in a statement.
Shares of the bank fell 3.6 percent to $327.65 in premarket trading. As of last close, they have lost nearly 3 percent since March 8 when Silicon Valley Bank unveiled its attempt to raise capital and triggered a meltdown in banking stocks.
Goldman’s profit in the quarter ended Mar. 31 fell to $3.09 billion compared with $3.83 billion a year earlier, while earnings per share slid to $8.79 from $10.76 last year, it said on Tuesday.
Global mergers and acquisitions activity shrank to its lowest level in more than a decade in the first quarter of 2023, according to data from Dealogic. That hurt Goldman’s investment banking fees by 26 percent to $1.58 billion.
Revenue from fixed income, currency and commodities (FICC) trading, usually a bright spot, fell 17 percent to $3.93 billion, while equity trading revenue fell 7 percent to $3.02 billion.
Peer JPMorgan Chase & Co. had last week reported a 24 percent drop in investment banking revenue. Its fixed income trading revenue was flat, while equity trading revenue plunged 12 percent.
Goldman’s net revenue in the quarter fell 5 percent to $12.22 billion.
Meanwhile, Bank of America Corp.’s first-quarter profit beat market expectations as it collected hefty interest payments from customers, while the lender’s traders extended their winning run.
