The earnings season has started with Goldman Sachs Group Inc (NYSE: GS) taking the lead yet again by reporting better-than-anticipated fiscal 2022 first-quarter revenues and profits. However, the company’s net profit fell on a y-o-y basis, mirroring a 27% drop in revenues. Following mixed quarterly results, the stock of Goldman Sachs ended at $321.64, almost unchanged from the previous day.
The New York-based financial behemoth reported first-quarter revenues of $12.933 billion, compared with $17.704 billion in the similar quarter last year. The decline was mainly due to the sharp drop in Asset Management and Investment Banking revenues, partly negated by a rise in Consumer & Wealth Management and Global Markets revenues.
For the quarter ended March 31, 2022, net earnings were $3.831 billion, or $10.76 per share, a decrease of 43% from $6.711 billion, or $18.60 a share in the quarter ended March 31, 2021.
On average, experts polled by Refinitiv had anticipated the company to report incomes of $8.89 per share on revenues of $11.83 billion.
Total non-interest revenues in 1Q 2022 were $11.106 billion, a decrease of 32% from $16.222 billion in 1Q 2021. Net interest income was $1.827 billion in 1Q 2022, up 23% from $1.482 billion in the prior-year period.
Segment-wise,
- Investment Banking revenues fell by 36% y-o-y to $2.411 billion. The decline was led by 59% y-o-y drop in underwriting revenues to $1.004 billion.
- Global Market revenues were $7.872 billion, up 4% from last year. Specifically, the global fixed income desk generated $4.722 billion in 1Q22, beating StreetAccount estimate by roughly $1.70 billion. Also, the equities division recorded $3.15 billion, surpassing the consensus estimate by about $570 million.
- Asset management revenues slumped by 88% y-o-y to $546 million.
- Consumer & Wealth Management revenues were $2.104 billion, an increase of 21% from the prior-year period. While wealth management revenue increased 19% to $1.621 billion, consumer banking revenues rose by 30% to $483 million.
Credit loss provision stood at $561 million in 1Q 2022, compared with a net benefit of $70 million in 1Q 2021.
For the first quarter, the return on equity was 15%, while annualized return on average tangible common shareholders’ equity (ROTE) was 15.80%.
The Board of Goldman Sachs has also declared a dividend of $2 per share, payable on June 29, 2022.
The mixed results are expected to keep the stock of Goldman Sachs range-bound with a slight bearish bias in the short term.
The historical price chart shows that the Goldman Sachs stock has broken the support at 350. The next major support is expected only near 300. Also, the stock is trading below its 50-day moving average, while the stochastics indicator is in the bearish zone. We are expecting the stock to stay in a downtrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
