Goldman Sachs profits jump to £3.3bn thanks to investment banking revival

Profits at Goldman Sachs surged to a better than expected £3.3billion in the first quarter of the year – thanks to a revival of its investment banking arm.

The 28 per cent rise compared to the same period last year was helped by a revival in deal- making fees as well as a strong period for bond trading.

Investment banking has been Goldman’s mainstay but sagged over the past couple of years.

And chief executive David Solomon has suffered heavy criticism over an ill-fated foray into consumer banking that cost it billions.

Yesterday, Solomon said that the bank was ‘focusing on our core strengths to serve our clients’. 

Chris Kotowski, analyst at broker Oppenheimer, said the results were a ‘near-perfect print’ with most profit metrics performing better than expected.

Wall Street rivals JP Morgan and Citigroup also pointed to improving conditions for dealmaking when they also posted better than expected results last Friday.

Solomon said: ‘We’re in the early stages of a reopening of capital markets.’

He pointed to growing investor appetite for stock market floats as well as solid activity in underwriting debt for deals.

A leading adviser for mergers and acquisitions, Goldman handled some of the biggest deals of 2023, including oil giant Exxon Mobil’s £48billion purchase of Pioneer Natural Resources.

And Solomon predicted more could follow as private equity firms look to pile in.

‘I do think the pace is going to pick up,’ he said.

Solomon also sounded an optimistic note about wider growth, saying: ‘We continue to be constructive on the health of the US economy.’

It comes as the US heads for a so-called ‘soft landing’ after the country’s central bank, the Federal Reserve, raised interest rates to cool inflation without causing a growth slowdown.