Goldman Sachs earnings fall due to sluggish deals and bond trading and Marcus’ loss

(Reuters) – Profits of Goldman Sachs Group (GS.N) fell 19 percent as deals and bond trading declined in the first quarter, while losses on the sale of some loans from its consumer unit hit profits.

Goldman lost $470 million selling Marcus Loans after it failed in its foray into retail banking, which CEO David Solomon had championed for years.

Solomon said in a statement on Tuesday that the results were “strong” despite the turmoil caused by bank failures in March. “The events of the first quarter were another stress test in real life, demonstrating the resilience of Goldman Sachs and the nation’s largest financial institutions,” he said.

Goldman’s net profit applied to common shareholders fell to $3.09 billion in the quarter ended March 31, compared with $3.83 billion a year ago, while earnings per share fell to $8.79 from $10.76 a year ago, it said Tuesday.

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

Shares fell 3% to $329.09 in early trade. They’ve lost nearly 3% since March 8, when a Silicon Valley bank revealed its attempt to raise capital and sent bank stocks crashing.

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

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

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

Goldman Sachs’ asset and wealth management unit boosted revenue 24% to $3.2 billion. However, that reflected a decrease of 10% 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 a source familiar with the matter told Reuters earlier this year that deposits held in the Marcus business remain material to Boldman and are not subject to review.

Goldman reorganized its business in 2022, building on its traditional mainstays of commercial and investment banking, strengthening its asset management arm and stepping back from consumer aspirations.

At Bank of America Corp (BAC.N), which also reported earnings on Tuesday, earnings beat analyst estimates after bond traders posted their best quarter in a decade.

(Reporting by Nikit Nishant and Noor Zainab Hussain in Bengaluru and Nupur Anand in New York; Editing by Lananh Nguyen

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