Q124 GS earnings

earnings summary

Here is a summary of the key points from the Goldman Sachs Q1 2024 earnings call, with an emphasis on earnings results, future guidance, themes and trends, and market conditions:

Earnings Results:

• Goldman Sachs reported strong Q1 results, with net revenues of $14.2 billion, net earnings of $4.1 billion, EPS of $11.58, and ROE of 14.8%. The Global Banking & Markets segment produced revenues of $9.7 billion and an 18% ROE.
• Asset & Wealth Management revenues were $3.8 billion, up 18% YoY. Record management and other fees rose 7% YoY to $2.5 billion.
• Advisory revenues increased YoY on higher completed M&A transactions. Equity and debt underwriting revenues rose significantly YoY amid higher industry volumes.
• FICC net revenues of $4.3 billion were up from a strong prior year, while Equities net revenues of $3.3 billion rose on better derivatives and prime brokerage performance.

Guidance and Themes:

• Management expects solid debt underwriting activity to continue given the more accommodating issuance environment. They see significant opportunities in Wealth Management, alternatives and solutions.
• Targets were reiterated for the Asset Management segment including high single-digit revenue growth, margin improvement, less capital density, and $40-50 billion in alternative fundraising for 2024. Private credit assets are expected to grow from $130 billion to $300 billion over 5 years.
• The Platform Solutions segment is expected to reach breakeven profitability in 2025. Goldman remains committed to Transaction Banking but has narrowed its focus.
• Management highlighted artificial intelligence as a major theme that could provide tailwinds to the business in infrastructure and financing needs. Goldman is also applying AI/ML to enhance its own productivity and efficiency.

Market Conditions:

• The capital markets are in the early stages of reopening, with debt issuance hitting records and strong reception for equity offerings signaling growing risk appetite.
• Monetary policy remains uncertain and data-dependent. The U.S. economy has proven resilient but faces headwinds from inflation, commercial real estate, and geopolitical tensions.
• Financial sponsor M&A activity remains muted but is picking up. Sponsors are facing pressure to increase the velocity of capital returns.
• Credit markets are seeing strong demand, with private credit growing rapidly but a viable syndicated loan market returning in Q1. A credit cycle remains a future risk.

Sentiment: The overall sentiment from Goldman Sachs management on the earnings call was positive. They expressed confidence in the firm’s strong Q1 performance, durable client franchises, market positioning, and strategic progress. Optimism was conveyed about the future opportunity set and Goldman’s ability to capture wallet share. However, management acknowledged uncertainty around the economic trajectory and highlighted potential headwinds. They aim to balance supporting client activity with prudent risk management.

In summary, Goldman Sachs delivered robust Q1 earnings and sees an attractive environment ahead in markets and banking, though management provided a balanced outlook given macro crosscurrents. The firm is executing on its strategic goals and generating strong Asset Management growth, while making progress on newer initiatives like Transaction Banking and Platform Solutions.