Like cucumber slices in a pitcher of water or fruit flies in the punchbowl, there were hints that market volatility affected an otherwise strong first quarter for Goldman Sachs.
The investment bank reported on Monday a Q1 profit of $4.7 billion, a 15% YoY increase. It reported net revenue of $15.1 billion and net earnings per share of $14.12—both ahead of analysts’ predictions, according to CNBC.
But it seems impossible for most to escape the economic turmoil right now. Goldman Sachs was no exception. The company reported investment banking fees were down 8% YoY, due largely to lower net revenue in its advisory business.
CEO David Solomon said the roller coaster market environment had a bit to do with it. “In investment banking, the volatile backdrop led to more muted activity relative to the levels we had expected coming into the year,” he told investors on an earnings call.
It’s (also) the economy, stupid. Solomon also warned that the next quarterly report might look quite different than Q1’s.
“We are entering the second quarter with a markedly different operating environment than earlier this year,” he said on the earnings call. “Our economists’ expectation for growth in the US has fallen meaningfully from over 2% to 0.5%. The prospect of a recession has increased with growing indications that economic activity is slowing down around the world.”
He added that Goldman Sachs’ clients, “including corporate CEOs and institutional investors, are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions. This uncertainty around the path forward and fears over the potentially escalating effects of the trade war have created material risks to the US and global economy.”
News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.