May 30, 2024

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Goldman Sachs profits rise after Wall Street rebound

Goldman Sachs profits rise after Wall Street rebound

Goldman Sachs earnings (A) rose 28% in the first quarter as investment banking revenue rose, giving CEO David Solomon some needed momentum heading into 2024.

Net income was $4.1 billion, exceeding analysts' expectations. Its revenue of $14.2 billion was also up from last year, thanks in part to a 32% increase in investment banking fees. Asset and wealth management revenues jumped, as did trading.

Goldman stock rose 3% in pre-market trading on Monday.

The improved results come on the heels of what was the most challenging year for Solomon since 2019, his first full year in office.

Dealmaking has slowed on Wall Street, and it has struggled with a costly exit from consumer banking and a series of high-profile departures from the company.

David M. Solomon, president and chief operating officer of Goldman Sachs, speaks at the 21st Milken Institute Global Conference in Beverly Hills, California, US on April 30, 2018. Photograph: Lucy Nicholson/Reuters

Goldman CEO David Solomon. Reuters/Lucy Nicholson (Reuters/Reuters)

The pressure on Solomon has not stopped in 2024. Two prominent proxy consulting firms are advising shareholders to cast votes this month that would limit Solomon's power, with the results scheduled to be tallied at the company's annual meeting on April 24.

The shareholder proposal, which has received the seal of approval from Institutional Shareholder Services (ISS) and Glass, Lewis & Co. It would split the CEO and Chairman positions, both currently held by Solomon. A similar proposal did not pass last year, receiving only 16% of the vote.

Glass Lewis separately suggests that shareholders also vote against Goldman's executive pay plan because of a “significant disconnect between pay and performance.” ISS provided “cautionary support” to the executive pay plan.

Solomon's 2023 compensation rose 24% — to $31 million — though earnings fell by the same amount.

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Not only is this on top of the $25 million he earned in 2022, it's more than his competitors Brian Moynihan, Charles Scharf, and Jane Fraser earned at Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C). . .

The first-quarter results could help Solomon as he prepares to face shareholders later this month. The increase in investment banking included a 24% increase in advisory fees, a 38% jump in debt underwriting and a 45% increase in equity underwriting fees.

Trading revenues from fixed income and equities also rose 10% from last year.

“Our first-quarter results reflect the strength of our global, interconnected franchises and the strength of Goldman Sachs' earnings,” Solomon said in a press release.

Much remains in flux at Goldman with the departure of top executives, raising new questions about the race to ultimately succeed Solomon.

One surprise exit in 2024 is Jim Esposito, who was co-head of global banking and markets at Goldman and will depart after nearly three decades. Esposito was seen on Wall Street as among Suleiman's potential successors.

Others departing in March included Stephanie Cohen, global head of the company's platform solutions division.

Even Goldman's board of directors is changing. This year, former Goldman CFO David Viniar was appointed as lead director of the board to replace Adebayo Ogunlesi, who announced he would step down after selling his infrastructure investment firm to BlackRock.

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