Profit statements

Goldman Sachs wealth management drives earnings down as M&A wave wanes

Goldman Sachs Group Inc reported a 43% drop in earnings, but beat Wall Street expectations as strong performance in wealth management and lower costs cushioned the blow from weak activity on capital markets.

The bank has taken steps under Chief Executive David Solomon to diversify its revenue streams and earn more from predictable sources such as retail banking, wealth and asset management. Consumer and wealth management saw net revenue rise 21% to $2.10 billion, helped by higher management fees and credit card balances, Goldman said.

Investment banking revenue, however, fell 36% to $2.41 billion as advisory fees on IPOs and debt underwriting fell amid heightened tensions between Russia and the United States. Ukraine. “It was an eventful quarter dominated by the devastating invasion of Ukraine,” chief executive David Solomon said in a statement.

“The rapidly changing market environment has had a significant effect on client business, as risk intermediation has come to the fore and equity issuance has come to a virtual standstill.” Goldman’s revenue from transaction advice remained largely unchanged, unlike rival Morgan Stanley, whose firm’s revenue doubled.

As the U.S. Federal Reserve began to wean the economy off pandemic-era support, trading slowed in the quarter and cast a pall over some of Goldman’s most lucrative businesses. In the first quarter, the bank posted earnings applicable to common shareholders of $3.83 billion, or $10.76 per share. Analysts had expected $8.89 per share, according to Refinitiv data.

Total net income fell to $12.93 billion in the quarter, down nearly 27% from a year ago. Operating expenses fell 18% in the quarter.

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