Goldman Sachs has reported a double-digit increase in its first-quarter profits this week, largely driven by the performance of the stock and bond markets in the early part of the year.
This comes after a challenging 2023 for Goldman, as higher interest rates slowed down corporate deals and mergers. However, with executives adapting to the new normal and interest rates seemingly on a downward trend, Goldman has reaped the benefits of this shift in attitude.
The New York-based investment bank announced a profit of $4.13billion, a 28% increase from the previous year. The company's earnings per share for the quarter were $11.67, significantly surpassing analysts' expectations. Most of Goldman's core businesses experienced strong quarterly performances. Investment banking fees rose by 32% in the quarter, reaching $2.08billion.
The bank attributed most of this growth to debt underwriting, likely due to higher interest rates prompting companies to refinance their bonds and debt.Trading in Goldman's fixed income, currencies and commodities department saw a 10% increase in the quarter, generating revenues of $4.32billion. Stock trading revenues also increased by 10%.
In Goldman's asset management business, which manages funds for wealthy individuals, large companies, and foundations, revenues were up by 18%. Goldman's return on equity, a key indicator of an investment bank's performance with its underlying assets, was 14.8% on an annualised basis. Banks such as Goldman usually aim to keep this figure above 10%.
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Goldman Sachs shares saw a rise of over 3% in morning trading.
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