Goldman Sachs Group, Inc. (NYSE:GS) has exceeded expectations with its first-quarter 2024 earnings per share of $11.58, surpassing the Zacks Consensus Estimate of $8.54. This represents a notable 16.3% increase from the same period last year.
The company’s shares surged by 4.02% in pre-market trading following the earnings beat, reflecting investor optimism driven by robust revenues reported for the quarter.
Goldman’s performance benefited from the resilience of its consumer banking and investment banking segments, coupled with enhanced fee income. However, increased expenses and provisions posed challenges to the bottom line.
Net earnings for the quarter amounted to $4.13 billion, marking a substantial 27.8% increase compared to the prior-year quarter and surpassing our estimate of $2.96 billion.
Quarterly Revenue Growth
Goldman Sachs reported quarterly net revenues of $14.21 billion, representing a solid 16.3% year-over-year increase and outpacing the Zacks Consensus Estimate of $12.89 billion.
Operating expenses for the quarter rose by 3% year over year to $8.66 billion. This increase was primarily driven by higher compensation and benefit costs, elevated transaction-related expenses, and incremental expenses related to the FDIC special assessment fee. However, lower impairments related to consolidated real estate investments partially offset these increases.
The provision for credit losses amounted to $318 million, in contrast to a net provision benefit of $171 million in the first quarter of 2023.
Segmental Performance Highlights
In the Asset & Wealth Management division, revenues totaled $3.79 billion, reflecting a robust 17.8% year-over-year increase driven by higher management and incentive fees, equity investments, and increased revenues from private banking and lending.
The Global Banking & Markets division reported revenues of $9.73 billion, representing a solid 15.2% year-over-year increase. This growth was fueled by increased investment banking activity, higher revenues in FICC, and a rise in equities revenues.
The Platform Solutions division’s revenues surged by 23.8% year over year to $698 million, primarily driven by increased revenues from consumer platforms.
Capital Ratios and Deployment
As of March 31, 2024, Goldman Sachs reported a standardized Common Equity Tier 1 capital ratio of 14.7%, up from 14.4% sequentially. However, the supplementary leverage ratio declined to 5.4% from the previous quarter’s 5.8%.
During the first quarter of 2024, the company returned $2.43 billion of capital to common shareholders, including $1.50 billion in share repurchases and common stock dividends of $929 million.
Outlook
Despite macroeconomic uncertainties and recessionary concerns, Goldman Sachs’ diversified business model positions it well for earnings stability. Strength in consumer banking and investment banking segments, coupled with active client engagement and a strong presence in mergers and acquisitions, are expected to drive future growth. However, elevated expenses and provisions remain areas of concern.
Featured Image: Megapixl
