Profits at Goldman Sachs (GS) grew 28% in the first quarter, driven by rising investment banking revenue, giving CEO David Solomon the momentum needed as 2024 begins.
Net profit was $4.1 billion, beating analysts’ expectations. Its revenue of $14.2 billion also jumped from last year, driven in part by a 32% rise in investment banking fees. Asset and wealth management revenues have surged, as has trading.
Goldman’s stock was up nearly 4% Monday in pre-market trading.
The improved results follow a year that was Solomon’s most difficult since 2019, his first full year in charge.
Trading slowed on Wall Street and he faced a costly exit from consumer banking and a series of high-profile departures from the company.
The pressure on Salomon has not eased in 2024. Two leading proxy advisory firms are advising shareholders this month to vote this month, which would limit Salomon’s power, with the results to be counted at the company’s annual meeting on April 24.
The shareholder proposal that received approval from Institutional Shareholder Services (ISS) and Glass, Lewis & Co. would split the roles of CEO and chairman, both currently held by Solomon. A similar proposal last year failed to pass, winning only 16 percent of the vote.
Glass Lewis separately suggests that shareholders are also voting against Goldman’s executive compensation plan due to a “significant disconnect between pay and performance.” ISS provided “prudent support” to the executive compensation plan.
Solomon’s compensation for 2023 increased 24%, to $31 million, despite earnings falling by the same amount.
Not only is that an increase from the $25 million he was awarded in 2022, but it’s more than his rivals Brian Moynihan, Charles Scharf and Jane Fraser earned at Bank of America (BAC) and Wells Fargo (WFC) and Citigroup (C). .
The first-quarter results could help Solomon as he prepares to face shareholders later this month. The investment banking boom includes a 24% rise in advisory fees, a 38% rise in debt underwriting and a 45% increase in equity underwriting fees.
Fixed income and equity trading revenues also increased by 10% compared to last year.
“Our first quarter results reflect the strength of our world-class, interconnected franchises and the earnings power of Goldman Sachs,” Solomon said in a press release.
Much is still moving at Goldman with the departure of top executives, raising new questions about the race to succeed Solomon.
A surprise exit in 2024 is that of Jim Esposito, who was co-head of Goldman’s global banking and markets division and is leaving after nearly three decades. Esposito was considered on Wall Street as one of Salomon’s possible successors.
Another recent departure in March was that of Stephanie Cohen, global head of its platform solutions division.
Even Goldman’s board of directors is changing. This year, former Goldman CFO David Viniar was named lead board director to replace Adebayo Ogunlesi, who announced he would resign after selling his infrastructure investment firm to BlackRock.
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