Goldman's Profit Falls 21% as Trading Slows

By Liz Hoffman 

Goldman Sachs Group Inc.'s first-quarter profit fell 21% from a year ago as quiet trading and underwriting took a toll across Wall Street.

Goldman posted a quarterly profit of $2.25 billion, or $5.71 a share, on revenue of $8.81 billion. Both are lower than a year ago, when a newly amped-up market generated outsize trading fees.

The bank's profit beat the expectations of analysts polled by Refinitiv, who predicted $1.97 billion, or $4.89 a share, though revenue came in lighter than the expected $8.99 billion.

Trading revenue fell 18% to $3.61 billion compared with a year-ago quarter, in which a suddenly vibrant market spurred investors off the sidelines. That mirrors a 17% drop at JPMorgan Chase & Co., which reported quarterly earnings last week.

But without the big consumer business that bolstered JPMorgan's earnings last week, Goldman is more beholden to its Wall Street traders and investment bankers to power earnings.

The firm has been investing heavily to change. It is growing a consumer bank, partnering with Apple Inc. on its first credit card, raising new investment funds it can collect fees to manage, and building data services it hopes will lure new types of trading clients.

Those business, though, "haven't yet hit their stride," Chief Financial Officer Stephen Scherr said earlier this year. Meanwhile, they have required more than $1 billion of investment spending, and investors being asked for patience are looking for signs of progress.

To that end, Mr. Scherr and his boss, Chief Executive David Solomon, have set a slew of financial targets and promised regular updates. That kind of transparency is unusual for Goldman, which historically kept its cards close and relied on steady profits to placate shareholders.

Goldman's investment-banking revenue was flat from a year ago at $1.81 billion. A rise in merger fees helped offset a slowdown in securities offerings that hit across Wall Street, exacerbated by a government shutdown that delayed approvals for new issuances. The firm said its backlog of deals, a closely watched measure of future fees, was down from the end of 2018.

Goldman's money-management unit posted revenue of $1.56 billion, down from a year ago.

Write to Liz Hoffman at [e-mail]

(END) Dow Jones Newswires

April 15, 2019 07:59 ET (11:59 GMT)

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