Goldman Sachs shares surge after profit boost
Goldman Sachs turned in a better-than-expected profit during David Solomon’s first quarter at the helm, helped by dealmakers in the division the new chief executive once oversaw.
A 56% jump in M&A fees as well as higher equities trading revenue during a volatile quarter for stocks helped offset another decline in bond trading, a business whose structural issues have forced Goldman to rethink its overall business model.
Shares of the fifth-largest US bank surged more than 7%. Goldman’s stock has fallen 30% over the last 12 months.
Using a plan Mr Solomon co-developed in 2017, Goldman Sachs is trying to generate $5bn (€4.4bn) in additional annual revenue by growing its consumer operation, wooing new institutional customers and convincing existing clients to do more business with the bank.
“We will not be complacent waiting for the market to return,” Mr Solomon said, referring to bond trading.
The bank’s $1.6bn of quarterly equities trading revenue was up 17%, with bond trading revenue dropping 18% to $822bn.
Mr Solomon also addressed Goldman’s involvement in the Malaysian 1MDB scandal, apologising for a former employee’s role, while defending the broader bank’s innocence.
Goldman reported a profit of $2.3bn in the fourth quarter.
That compared with a loss of $2.1bn in Q4 2017 when the bank took a big one-time hit from the US tax code overhaul.
Goldman’s total revenue was $8.1bn, above analysts’ average estimate of $7.6bn.
The biggest line-item gain was the $1.2bn of M&A advisory fees Goldman reported.
The bank added $844m to its legal and regulatory provisions last year, more than four times what it set aside in 2017, though it did not specify the purpose.
