Goldman Sachs’ earnings highest since 2021

NEW YORK – Goldman Sachs’ profit beat Wall Street estimates, fueled by a recovery in underwriting, deals and bond trading in the first quarter that lifted its earnings per share to the highest since late 2021.

The bank’s shares rose more than 3% on Monday after it reported a strong comeback in investment banking – its traditional mainstay – after a slowdown over the last two years.

Rivals Jpmorgan Chase and Citigroup cited improving conditions for deal-making on Friday when they reported profits that beat market expectations. But their executives also cautioned about risks to the economic outlook, including the uncertain path of U.S. interest rates.

Goldman’s profit rose 28% to $4.13 billion, or $11.58 per share, in the first quarter. That was higher than the $8.56 earnings per share that analysts expected. It is the highest EPS since the third quarter of 2021, according to LSEG, and beat market estimates for a slight decline.

The bank’s stock has climbed more than 4% this year, compared with an almost 7% drop for rival Morgan Stanley.

“We’re in the early stages of a reopening of capital markets,” CEO David Solomon told investors on a conference call, citing rising risk appetite among investors for IPOS and solid debt underwriting activity. “We continue to be constructive on the health of the U.S. economy.” Oppenheimer analyst Chris Kotowski wrote in a report that the earnings were a “nearperfect print,” with most profit drivers performing better than expected.

The results could relieve pressure on Solomon after a foray into consumer banking lost billions, drawing rancor and prompting senior departures.

“A rebound in a variety of capital market sensitive revenue areas may finally be underway, while an exit from the ill-fated entry into consumer businesses has removed some headline risk,” said Stephen Biggar, a banking analyst at Argus Research.

As a leading adviser for mergers and acquisitions, Goldman handled some of last year’s biggest deals, including Exxon Mobil’s $60 billion purchase of Pioneer Natural Resources.

Deals activity could also increase as private equity firms get more involved, Solomon said.

“The LP (limited partner) community is putting a lot of pressure on the financial sponsor community to return more capital,” Solomon said. “And so I do think the pace is going to pick up,” he said.

Goldman Sachs is advising clients on artificial intelligence, including potential commercial applications, regulation and impact on jobs.

“There will be significant demand for Ai-related infrastructure and as a result, financing, which will be a tailwind to our business,” he said.

The success of Openai’s CHATGPT has energized investors, who have been pouring money into promising AI startups.