Goldman Sachs Beats Profit Expectations on Strong Investment Banking Performance

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Goldman Sachs (GS.N) exceeded Wall Street’s profit projections, driven by a resurgence in underwriting, deals, and bond trading during the first quarter, resulting in its highest earnings per share since late 2021. The bank’s shares saw a more than 3% increase following the announcement, reflecting the robust recovery in investment banking, which has historically been its core focus.

In the first quarter, Goldman’s profit surged by 28% to $4.13 billion, equivalent to $11.58 per share, surpassing analysts’ expectations of $8.56 earnings per share (EPS). According to LSEG, this marks the highest EPS since the third quarter of 2021 and outperforms market forecasts, which had anticipated a slight decline.

During an investor conference call, CEO David Solomon highlighted the early stages of a capital markets reopening, citing increased risk appetite among investors for initial public offerings and strong debt underwriting activity. He expressed optimism about the health of the U.S. economy moving forward.

Analyst Chris Kotowski from Oppenheimer described the earnings as a “near-perfect print,” with most profit drivers exceeding expectations. The results are anticipated to alleviate pressure on Solomon following losses incurred from the bank’s venture into consumer banking, which resulted in significant criticism and senior departures.

Stephen Biggar, a banking analyst at Argus Research, noted a potential rebound in various revenue areas sensitive to capital markets, signaling a positive trend. Additionally, the exit from the troubled consumer banking sector has mitigated headline risks for the bank.