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Goldman (GS) Q1 Earnings Top Estimates, Revenues Dip Y/Y
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The Goldman Sachs Group, Inc.’s (GS - Free Report) first-quarter 2022 earnings per share of $10.76 have surpassed the Zacks Consensus Estimate of $8.61. However, the bottom line fell 42.2% from the year-earlier quarter.
The stock rose 1.5% during the pre-market trading, reflecting investors’ optimism regarding the better-than-expected results. Notably, the full-day trading session will display a clearer picture.
While strength in the Fixed Income, Currency and Commodities Client Execution (“FICC”), wealth management, and consumer banking businesses acted as a tailwind, the bank’s results were hurt by lower debt and equity underwriting revenues.
Net earnings of $3.94 billion decreased 42% from the prior-year quarter.
Revenues Fall, Expenses Decline
Net revenues of $12.93 billion fell 27% from the year-ago quarter. Nonetheless, the top line beat the Zacks Consensus Estimate of $11.28 billion.
Total operating expenses declined 18% year over year to $7.72 billion.
Provision for credit losses was $561 million against a net benefit of $70 million in the prior-year quarter.
Segmental Performance Mixed
The Investment Banking (IB) division generated revenues of $2.4 billion in the reported quarter, down 36% year over year. Results reflect a decline in underwriting revenues, with a marginal rise in financial advisory revenues more than offsetting equity and debt underwriting revenues. Corporate lending revenues improved 37% from the prior-year quarter.
The Global Markets division recorded revenues of $7.87 billion, up 4% year over year. The uptick indicated a rise in net revenues in FICC (up 21%) due to higher intermediation net revenues. However, a decline in equities revenues (down 15%) was recorded due to lower equities intermediation.
The Consumer and Wealth Management division’s revenues were $2.1 billion, 21% higher than the year-ago figure. Increased revenues from wealth management (up 19%) and consumer banking (up 30%) resulted in the upsurge.
The Asset Management division recorded revenues of $546 million, indicating an 88% year-over-year decline. The downside resulted from notably lower net revenues in equity investments, as well as lending and debt investments.
Firmwide assets under supervision were $2.39 trillion, up 8.6% year over year.
Capital Position Weak, Profitability Declines
As of Mar 31, 2022, the standardized Common Equity Tier 1 capital ratio was 14.4%. The figure was down from the prior-year quarter’s 14.3%. The company’s supplementary leverage ratio was 5.6% as of Mar 31, 2022, down from the prior-year quarter figure of 6.5%.
Also, return on average common shareholders’ equity (on an annualized basis) decreased sequentially to 15% in the reported quarter.
Capital Deployment Update
In the quarter under review, Goldman returned $1.21 billion of capital to common shareholders. This included 1.4 million share repurchases worth $500 million and common stock dividends of $711 million.
Conclusion
Goldman’s quarterly results were mixed. Lower net revenues in the Asset Management and IB segments were concerning. While its well-diversified business, apart from its core IB operations, will ensure earnings stability going forward, macroeconomic uncertainty and fears will likely weigh on the financial performance.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
Fifth Third Bancorp (FITB - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for Fifth Third’s first-quarter earnings has moved 2.8% lower to 70 cents. This indicates a 24.7% decline from the prior-year quarter.
First Horizon National Corporation (FHN - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for First Horizon’s Q1 earnings has moved 2.9% lower to 34 cents. This indicates a 33.3% decline from the prior-year quarter.
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Goldman (GS) Q1 Earnings Top Estimates, Revenues Dip Y/Y
The Goldman Sachs Group, Inc.’s (GS - Free Report) first-quarter 2022 earnings per share of $10.76 have surpassed the Zacks Consensus Estimate of $8.61. However, the bottom line fell 42.2% from the year-earlier quarter.
The stock rose 1.5% during the pre-market trading, reflecting investors’ optimism regarding the better-than-expected results. Notably, the full-day trading session will display a clearer picture.
While strength in the Fixed Income, Currency and Commodities Client Execution (“FICC”), wealth management, and consumer banking businesses acted as a tailwind, the bank’s results were hurt by lower debt and equity underwriting revenues.
Net earnings of $3.94 billion decreased 42% from the prior-year quarter.
Revenues Fall, Expenses Decline
Net revenues of $12.93 billion fell 27% from the year-ago quarter. Nonetheless, the top line beat the Zacks Consensus Estimate of $11.28 billion.
Total operating expenses declined 18% year over year to $7.72 billion.
Provision for credit losses was $561 million against a net benefit of $70 million in the prior-year quarter.
Segmental Performance Mixed
The Investment Banking (IB) division generated revenues of $2.4 billion in the reported quarter, down 36% year over year. Results reflect a decline in underwriting revenues, with a marginal rise in financial advisory revenues more than offsetting equity and debt underwriting revenues. Corporate lending revenues improved 37% from the prior-year quarter.
The Global Markets division recorded revenues of $7.87 billion, up 4% year over year. The uptick indicated a rise in net revenues in FICC (up 21%) due to higher intermediation net revenues. However, a decline in equities revenues (down 15%) was recorded due to lower equities intermediation.
The Consumer and Wealth Management division’s revenues were $2.1 billion, 21% higher than the year-ago figure. Increased revenues from wealth management (up 19%) and consumer banking (up 30%) resulted in the upsurge.
The Asset Management division recorded revenues of $546 million, indicating an 88% year-over-year decline. The downside resulted from notably lower net revenues in equity investments, as well as lending and debt investments.
Firmwide assets under supervision were $2.39 trillion, up 8.6% year over year.
Capital Position Weak, Profitability Declines
As of Mar 31, 2022, the standardized Common Equity Tier 1 capital ratio was 14.4%. The figure was down from the prior-year quarter’s 14.3%. The company’s supplementary leverage ratio was 5.6% as of Mar 31, 2022, down from the prior-year quarter figure of 6.5%.
Also, return on average common shareholders’ equity (on an annualized basis) decreased sequentially to 15% in the reported quarter.
Capital Deployment Update
In the quarter under review, Goldman returned $1.21 billion of capital to common shareholders. This included 1.4 million share repurchases worth $500 million and common stock dividends of $711 million.
Conclusion
Goldman’s quarterly results were mixed. Lower net revenues in the Asset Management and IB segments were concerning. While its well-diversified business, apart from its core IB operations, will ensure earnings stability going forward, macroeconomic uncertainty and fears will likely weigh on the financial performance.
The Goldman Sachs Group, Inc. Price, Consensus and EPS Surprise
The Goldman Sachs Group, Inc. price-consensus-eps-surprise-chart | The Goldman Sachs Group, Inc. Quote
Currently, Goldman has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Companies
Fifth Third Bancorp (FITB - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for Fifth Third’s first-quarter earnings has moved 2.8% lower to 70 cents. This indicates a 24.7% decline from the prior-year quarter.
First Horizon National Corporation (FHN - Free Report) is slated to report first-quarter 2022 results on Apr 19.
Over the past 30 days, the Zacks Consensus Estimate for First Horizon’s Q1 earnings has moved 2.9% lower to 34 cents. This indicates a 33.3% decline from the prior-year quarter.