Goldman Profit Rises Sharply on Strong Trading, Deal Making -- Update
By Peter Rudegeair
Goldman Sachs Group Inc. reported record profit and revenue in
the first quarter, benefiting from a turbocharged market and an
Goldman posted a quarterly profit of $6.84 billion, or $18.60 a
share, on revenue of $17.7 billion. Both measures were up
significantly from a year ago -- when the bank posted profit of
$1.2 billion on revenue of $8.7 billion -- and exceeded the
expectations of analysts polled by FactSet, who forecast profit of
$10.22 a share on revenue of $12.56 billion.
The first three months of 2021 were a frenetic period for banks'
capital markets and trading arms. Reddit-reading retail traders
sent so-called meme stocks to new heights. Record amounts of money
poured into blank-check companies, several of which announced deals
during the quarter to bring fast-growing companies including Social
Finance Inc. and Lucid Motors Inc. to the public markets.
Goldman thrived in that environment. Trading revenue rose 47%
from a year ago to $7.6 billion, thanks to a 31% increase in
fixed-income, currency and commodity trading revenue and a 68%
increase in stock-trading revenue.
The firm's investment bankers brought in $3.8 billion in fees
arranging mergers and securities offerings, up 73% from last year's
first quarter and another record high for Goldman. Revenue from
underwriting new initial public offerings, special-purpose
acquisition companies and other sales of stock more than quadrupled
to $1.6 billion.
The unwinding of large positions held by Archegos Capital
Management in late March affected Goldman less than other banks,
partially because the firm was among the first to offload
Archegos's assets when the family office couldn't meet margin
calls. Whereas Credit Suisse Group AG reported a $4.7 billion hit
related to Archegos's meltdown, Goldman didn't report any material
impact in its earnings release.
Shares of Goldman have risen 24% since the start of 2021 and hit
an all-time high of $348.81 last month.
The bank's return on equity, a measure of how profitably it uses
shareholders' money, was 31% on an annualized basis, its highest in
a quarter since 2009.
Revenue in the bank's asset-management division, which includes
funds and investments Goldman manages for itself and for clients,
rose to $4.6 billion. Revenue in Goldman's consumer and
wealth-management division, which includes its Marcus consumer bank
as well as its team serving wealthy clients, rose 16% to $1.7
Operating expenses in the first quarter were $9.4 billion, up
46% from the same period last year. Compensation expenses rose 87%
to $6 billion, or roughly 34% of revenue.
Write to Peter Rudegeair at Peter.Rudegeair@wsj.com
(END) Dow Jones Newswires
April 14, 2021 08:41 ET (12:41 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.