FAST FIVE: Goldman Trading Revenues Disappoint In Quarter Salvaged By Surge In M&A Deals
Following JPMorgan's across the board beat, and Wells Fargo's latest disappointing results, moments ago Goldman reported a mixed set of numbers, with the company solidly beating on earnings, as EPS came in at $5.71, above the $4.89 expected, while revenues disappointed, printing at $8.81BN, below the $8.99BN consensus exp., and down 13% from a year ago. Of note, Goldman reported an effective income tax rate for Q1 of 17.2%, up from the full year rate of 16.2% for 2018, as the tax cut tailwind is now officially over.
The flipside, however, was that revenue has continued to shrink at the bank as the news management appears unable to find the sweet spot for the bank's potential.
Commenting on the 11% drop Y/Y in FICC, Goldman said that this reflected “lower net revenues in interest rate products, currencies and credit products, partially offset by higher net revenues in mortgages and commodities.” While trading disappointed on net, the biggest upside surprise came fromt he bank's investment banking segment, which were $1.81 billion for the first quarter of 2019, unchanged compared with the first quarter of 2018 and 11% lower than the fourth quarter of 2018.
Our core businesses generated solid results driven by our strong franchise positions.
With improving momentum across our businesses, we are confident that Goldman Sachs will generate attractive returns for our shareholders.” The market reaction to Goldman's earnings however was rather more muted, and reflected disappointment, as the stock initially spiked on the EPS beat and dividend boost, however it has since shrunk and was modestly in the red as traders digested the continuing weakness in the company's trading group.