Goldman Sachs Group Inc.’s traders countered the industry’s underwriting slump with revenue gains that raced past analysts’ estimates.
Goldman was the last of the six biggest US banks to post results, with investors scouring the reports for clues on the health of the economy. Company executives last week said the US is well-positioned to withstand fallout from surging inflation, even if rising interest rates push the economy into a recession in coming quarters. Bank bosses warned that a potent mix of hurdles are still a threat, including inflation and the impact of Russia’s invasion of Ukraine.
“Given the challenging operating environment, we are closely re-examining all of our forward spending and investment plans to ensure the best use of our resources,” Coleman said. “As a result, we’re taking a number of actions to improve our operating efficiency. Specifically, we have made the decision to slow hiring velocity and reduce certain professional fees going forward.”
Goldman Sachs’s investment-banking revenue fell 41 per cent, reflecting a sharp drop in underwriting, a decline that had been well-telegraphed as clients steered clear of capital markets. Analysts were expecting it to fall 46 per cent. The merger-advisory business helped ward off a bigger drop, posting US$1.2 billion in revenue -- a figure that was almost double the numbers posted by the firm’s closest rival in that business. JPMorgan Chase & Co. took the No. 2 position in the quarter.
The bank has signaled its intent to turbocharge fundraising to get to a place where fees from managing outside capital outweigh investments. The company’s balance sheet equity investments stand at US$16 billion, down from US$22 billion at the end of 2019. Those investments lost US$221 million in the quarter on the broad selloff in markets.
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