A Slimmer Goldman Sachs Posts Hefty Jump in Profit

What a difference a year makes at Goldman Sachs.

The venerated Wall Street investment bank, which a year ago was in the throes of struggle after attempting to build a Main Street franchise, on Monday showed off the benefits of sticking to what it knows best. It earned nearly $4 billion in the first quarter — around $1 billion more than analysts expected — after reaping big profits in its trading and corporate advisory franchises.

The results were all the more relieving for Goldman because they came just a few days after rival JPMorgan Chase suffered its worst stock slide in nearly four years as it revealed that it expected a rougher year than earlier forecast.

Here’s how Goldman did it — and what that means for other lenders.

Goldman benefited from a bumper period in its mainline investment bank, which makes money from arranging financing for companies looking to borrow or offer shares to the public, as well as advice on mergers. Its investment banking fees exceeded $2 billion in the first quarter, nearly one-third higher than the same period a year earlier.

Deal-making typically ebbs and flows, and it has been muted for more than a year. If it returns, Goldman is among the big banks in line to benefit.

Goldman’s share price rose more than 5 percent in early trading on Monday.

Err, no, not always.

At the end of last week, some of Goldman’s competitors, including JPMorgan Chase and Wells Fargo, reported weaknesses in some parts of their businesses in the first quarter. Jamie Dimon, JPMorgan’s chief executive, warned of an “unsettling” global landscape, highlighting a cascade of pressures, including war, rising geopolitical tensions and inflation. He described financial markets as “too happy.”

As Goldman has a relatively tiny consumer business — think bank branches — it may weather the uncertainty better than lenders with broader exposure to the economy. It may even do well; Goldman said Monday that it actually made more money from its credit card arm, which runs cards for stores like Apple, in part because customers were carrying higher balances.

Morgan Stanley, another bank with a similar profile to Goldman, reports earnings on Tuesday.

Bank earnings are closely followed because they often contain hints about the economy overall, but this year’s collection has so far painted a muddled picture. While Mr. Dimon was relatively pessimistic, Citi said its outlook for places like Europe had improved recently.

“Overall, when we look at the global economy, the strength seems to be resilient. We do expect that there will be a slowdown in growth through 2024, but when you look at the labor markets and the strength of the consumer, that seems to be holding up,” said Mark Mason, Citi’s chief financial officer.

Both Citi and Goldman continue to pare their staffs. Goldman said that its head count was down 2 percent last quarter.

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