Goldman Sachs report 28% profit surge driven by investment banking

Goldman Sachs has reported 28 per cent increase in profit for the first quarter, fuelled by a resurgence in debt underwriting and dealmaking activities, boosting its investment banking division.

According to the financial results released on Monday, Goldman Sachs recorded a profit of $4.13 billion, or $11.58 per share, for the quarter ending March 31, compared to $3.23 billion, or $8.79 per share, in the same period last year.

CEO David Solomon commented on the results, stating, "We continue to execute on our strategy, focusing on our core strengths to serve our clients and deliver for our shareholders."

Goldman Sachs' performance mirrors improving conditions in the broader financial sector, with rivals JPMorgan Chase and Citigroup also reporting profits that exceeded market expectations, citing favourable conditions for dealmaking.

As a leading player in mergers and acquisitions advisory, Goldman Sachs has been involved in some of the largest deals, including Exxon Mobil's $60 billion acquisition of Pioneer Natural Resources last year.

The rebound in equity and bond underwriting business, coupled with corporations' growing confidence in capital markets, contributed to higher fees for Goldman's investment banking unit, which saw a 32 per cent increase in revenue to $2.08 billion.

Revenue from trading in fixed income, currencies, and commodities rose by 10 per cent to $4.32 billion, while equities revenue surged by 10 per cent to $3.31 billion.

The global volume of mergers and acquisitions also experienced a substantial uptick, climbing by 30 per cent in the first quarter to approximately $755.1 billion compared to a year ago, according to data from Dealogic.

Goldman's platform solutions unit, which encompasses some of its consumer operations, reported a 24 per cent increase in revenue.

However, the bank continues to streamline its consumer banking operations following significant losses, including write downs on GreenSky, a home improvement lender it acquired and subsequently sold. CEO Solomon's retail strategy has faced criticism, with top proxy adviser Institutional Shareholder Services (ISS) urging shareholders to vote for splitting the chairman and CEO roles.

Additionally, Goldman's provisions for credit losses rose to $318 million compared to a net benefit of $171 million a year ago, reflecting concerns about potential defaults in credit cards and wholesale loans.

(With Reuters inputs)