Goldman Sachs profit falls on sluggish deals and bond trading, Marcus loss

By Niket Nishant and Nupur Anand

(Reuters) -Goldman Sachs Group Inc’s profit fell 19% as dealmaking and bond trading slumped in the first quarter, while losses from the sale of some loans from its consumer unit weighed on earnings.

Goldman lost $470 million on the sale of the Marcus loans after its foray into consumer banking, which CEO David Solomon had championed for years, flopped. 

The results were “solid” despite turmoil sparked by bank failures in March, Solomon said in a statement on Tuesday. “The events of the first quarter acted as another real-life stress test, demonstrating the resilience of Goldman Sachs (NYSE:) and the nation’s largest financial institutions,” he said.

Goldman’s net profit applicable to common shareholders fell to $3.09 billion in the quarter ended Mar. 31, 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.

Refinitiv IBES data, excluding one-time costs, showed the Wall Street heavyweight earned $9.87 per share. That exceeded analysts’ average estimate of $8.10 per share.

Shares fell 3% to $329.09 in early trading. They have lost nearly 3% since March 8, when Silicon Valley Bank unveiled its attempt to raise capital and triggered a meltdown in banking stocks.

Global mergers and acquisitions activity shrank to the lowest in more than a decade in the first quarter, according to data from Dealogic. That hurt Goldman’s investment banking fees, which dropped 26% to $1.58 billion.

Revenue from fixed income, currency and commodities (FICC) trading, usually a bright spot, plunged 17% to $3.93 billion, while equity trading revenue sank 7% to $3.02 billion.

“The revenue shortfall versus our expectations came mainly on FICC trading and equity investments, which are of course both relatively volatile,” said Chris Kotowski, a banking analyst at Oppenheimer & Co, wrote in a note.

Goldman’s asset and wealth management unit boosted revenue by 24% to $3.2 billion. Still, that reflected a 10% decline from the end of last year.

Net revenue fell 5% to $12.22 billion in the first quarter.

Goldman is exploring strategic options for its consumer platform business, which has lost about $3 billion in three years, executives told investors in February.

But deposits held in the Marcus business remain core to Goldman and are not under review, a source familiar with the matter had told Reuters earlier this year.

    Goldman reshuffled its businesses in 2022, leaning into its traditional mainstays of trading and investment banking, beefing up its asset management arm and stepping back from its consumer aspirations.

At Bank of America Corp (NYSE:), which also reported earnings on Tuesday, profit beat analysts’ estimates after its bond traders had their best quarter in a decade.