Goldman Sachs’ stab at consumer banking grew more costly on Tuesday, overshadowing some bright spots in other areas of the bank.
A $470 million loss after a partial sale of its Marcus personal loans portfolio, and a transfer of the remaining portfolio from held-to-maturity to held-for-sale status, hampered results in the first quarter. The firm’s $3.23 billion profit was down 18 percent from a year earlier, while revenue was $12.22 billion, down 5 percent from a year ago.
Goldman shares fell roughly 2 percent early trading Tuesday but made back some of the loss to finish down 1.7 percent for the session.
Goldman’s global banking and markets division generated quarterly revenue of $8.44 billion, which the bank said was 16 percent lower than the strong first quarter of 2022 but 30 percent higher than the fourth quarter of 2022. Within the division, an industry-wide decline in deals and debt underwriting dragged investment banking fees down to $1.58 billion in the quarter, 26 percent lower than a year earlier. The bank said it still ranks first in the world in completed mergers and acquisitions since the start of the year.
The asset and wealth management division created in the fall reported quarterly revenue of $3.22 billion, 24 percent higher than a year earlier but 10 percent lower than the fourth quarter of 2022.
The $470 million loss after the sale of the Marcus loan portfolio hit that division’s private banking and lending segment hard. The segment reported revenue of just $354 million in the first quarter, down 28 percent from a year earlier and 53 percent from the fourth quarter last year. Higher deposit spreads helped offset the impact of the loss, the bank said.
Goldman’s total assets under supervision continued to grow, reaching a record $2.67 trillion after adding $125 billion in assets in the first quarter. Market appreciation, primarily in equity and fixed-income assets, contributed $68 billion, while liquidity products contributed net inflows of $49 billion.
The asset and wealth management division continued to grow its alternative investments business in the first quarter, attracting another $5 billion, for a total of $268 billion. Management and other fees from alternative investments were $494 million, up 21 percent compared to a year earlier. Alternatives contributed $1.8 billion in management and other fees in 2022.
Goldman is also now one of the largest alternative asset managers, after raising $179 billion from 2020 to 2022. The firm raised another $14 billion — $4 billion in corporate equity, $4 billion in credit, $2 billion in real estate, and $4 billion in hedge funds and other strategies — in the first quarter.
During the bank’s investor day in February, CEO David Solomon said that Goldman is trying to top $225 billion in alternative assets before 2023, largely by raising capital from the institutional investors with whom it already works.
Another bright spot in the first-quarter earnings was Goldman’s platform solutions business, which continues to grow and diversify the bank’s revenue. First-quarter revenue was $564 million, more than double the amount a year earlier. The bank said that most of the revenue ($490 million) comes from consumer platforms that serve 13.8 million active customers, although transaction banking and other revenues were also higher.
