The results reflected a strong comeback for investment banking - Goldman's traditional mainstay - after a slowdown over the last two years.
Rivals JPMorgan Chase (JPM.N) and Citigroup (C.N) cited improving conditions for dealmaking on Friday when they reported profits that beat market expectations. But their executives also cautioned about risks to the economic outlook, including the uncertain path of U.S. interest rates.
Goldman's profit rose 28% to $4.13 billion, or $11.58 per share, in the first quarter. That was higher than the $8.56 earnings per share (EPS) that analysts expected.
It is the highest EPS since the third quarter of 2021, according to LSEG, and beat market estimates for a slight decline.
The bank's stock rose 5.4% in early trading. As of Friday, it has climbed about 1% this year, compared with an almost 8% drop for rival Morgan Stanley (MS.N).
It was a "near-perfect print" with most profit drivers performing better than expected, Oppenheimer analysts led by Chris Kotowski wrote in a report.
The results could relieve pressure on CEO David Solomon after an ill-fated foray into consumer banking lost billions, drawing rancor and senior departures.
"A rebound in a variety of capital market sensitive revenue areas may finally be underway, while an exit from the ill-fated entry into consumer businesses has removed some headline risk," said Stephen Biggar, a banking analyst at Argus Research.
As a leading advisor for mergers and acquisitions, Goldman advised on some of last year's biggest deals, including Exxon Mobil's (XOM.N) $60 billion purchase of Pioneer Natural Resources.
"We continue to execute on our strategy, focusing on our core strengths to serve our clients and deliver for our shareholders," Solomon said in a statement.
SOFT LANDING
The Federal Reserve has so far managed to steer the economy toward a so-called soft landing, in which it raises interest rates and tames inflation while avoiding a major downturn.
As corporations regain some confidence to raise money in capital markets, equity and bond underwriting have rebounded. Improving conditions have also spurred companies to strike more deals.
Goldman's investment banking fees climbed 32% to $2.08 billion, propelled by higher fees from underwriting debt and stock offerings, as well as advising on mergers.
The global volume of mergers and acquisitions climbed 30% in the first quarter to about $755.1 billion from a year ago, according to data from Dealogic.
Revenue from trading in fixed income, currencies and commodities (FICC) rose 10% to $4.32 billion, helped by record financing revenue in mortgages and structured lending.
Revenue for equities jumped 10% to $3.31 billion, but fell slightly for commodities and interest rate products.
The asset and wealth management division generated record quarterly management fees of $2.45 billion. Meanwhile, assets under supervision rose to a record $2.85 trillion, with wealth client assets reaching $1.5 trillion. The two businesses were joined as part of a reorganization in 2022.
Platform Solutions, the unit that houses some of Goldman's consumer operations, garnered 24% higher revenue.
Goldman is slimming down its ill-fated consumer banking operations after they lost billions of dollars. It has already taken big writedowns on GreenSky, a home improvement lender it bought and sold two years later.
Solomon, who once championed the retail push, has been criticized for the strategy.
Top proxy adviser Institutional Shareholder Services (ISS) urged shareholders to vote for the bank to split its chairman and CEO roles, both of which are currently held by Solomon. ISS cited his "missteps and steep losses" in a report to investors.
Goldman has also scrapped its co-branded credit cards with General Motors (GM.N), and a similar partnership it has with tech giant Apple (AAPL.O) is facing an uncertain future.
The bank's provisions for credit losses jumped to $318 million compared to a net benefit of $171 million a year ago. The increase was tied to its credit cards and wholesale loan portfolio.
Goldman had a headcount of 44,400 at the end of March, 2% lower than the fourth quarter. It had laid off thousands of employees in 2023, including a January round of cuts that was its largest since the 2008 financial crisis.
