April 15th, 2024 – In the first quarter, Goldman Sachs witnessed a 28% increase in profits, well beyond what analysts expected, as a result of their strong performances in these months. Bloomberg’s compiled analyst forecasts were nearly $1 bln short for the bank’s reported net income for the first three months of the year, which actually amounted to $4.1 bln, up from $3.2 bln a year earlier.
The reason for this memorable achievement lies into the refocus led by the CEO David Solomon: he decided that it was time for Goldman Sachs to “play to their core strengths”, that is to say centering again on investment banking and trading businesses, asset and wealth management and slightly “put aside” the concern upon consumer business. Investment banking experienced its most successful quarter in two years, being up 32% from a year earlier, and news of big companies such as Reddit going for IPOs give us reasonably strong beliefs that M&A practices, therefore capital markets could bloom again. Furthermore, both equity and fixed-income trading businesses reported significant increases in revenues with respect to the previous year, notwithstanding the market volatility caused by wars and central banks imposing higher interest rates which have now built a whole different scenario. Goldman succeeded in even exceeding its competitors, reporting higher results than both JP Morgan Chase and Citigroup reestablishing its position within the global banking landscape.
Goldman’s stock closed up almost 3% on Monday due to its better than expected carried out performances and has managed to show again its capabilities within the core of its true business and promising prospects for the merger and acquisition sector and capital markets, being part of a significant rebound after tough times. In the end, the CEO David Salomon teaches us that taking a step back to look at the big picture and eventually be conscious enough as to backtrack when necessary is what can make us go even further.
Author: Ilaria Savignoni