Profits at Goldman Sachs (G.S) rose 28% in the first quarter as investment banking revenues rose sharply, giving CEO David Solomon needed momentum heading into 2024.
Net income was $4.1 billion, beating analysts’ expectations. Revenue of $14.2 billion also rose sharply from a year earlier, driven in part by a 32% increase in investment banking fees. Asset and asset management revenues skyrocketed, as did trading.
Goldman shares rose 3% in premarket trading on Monday.
The improved results follow what has been Solomon’s most challenging year since 2019, his first full year at the helm.
Business on Wall Street slowed and he struggled with a costly exit from retail banking and a series of high-profile departures from the company.
The pressure on Solomon has not eased in 2024. Two prominent proxy advisory firms are advising shareholders to cast votes this month that would limit Solomon’s power. The results are expected to be determined at the company’s annual general meeting on April 24.
The proposal, which received approval from Institutional Shareholder Services (ISS) and Glass, Lewis & Co., would split the roles of CEO and chairman, both of which are currently occupied by Solomon. A similar proposal failed to pass last year, receiving just 16% of the vote.
Glass Lewis separately suggests that shareholders should also vote against Goldman’s executive compensation plan due to a “significant disparity between pay and performance.” ISS provided “precautionary support” for the executive pay plan.
Solomon’s 2023 compensation rose 24% – to $31 million – despite a decline in profits of the same amount.
Not only is that more than the $25 million he received in 2022, it’s also more than his rivals Brian Moynihan, Charles Scharf and Jane Fraser at Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) earned. .
Only JPMorgan Chase (JPM) CEO Jamie Dimon and outgoing Morgan Stanley (MS) CEO James Gorman received more awards for their performance in 2023.
Much is changing at Goldman as key executives leave the company, raising new questions about the race to succeed Solomon.
A surprise departure in 2024 is Jim Esposito, who was co-head of Goldman’s global banking and markets division, departing after nearly three decades. Esposito was seen on Wall Street as one of Solomon’s possible successors.
Another recent departure in March was Stephanie Cohen, global head of platform solutions.
Even Goldman’s board is changing. This year, former Goldman CFO David Viniar was named executive director of the board, replacing Adebayo Ogunlesi, who announced his retirement after selling his infrastructure investment company to BlackRock.
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% increase in bond underwriting fees and a 45% increase in equity underwriting fees.
Trading revenue from fixed-interest securities and stocks also increased by 10% compared to the previous year.
“Our first quarter results reflect the strength of our world-class and interconnected franchises and the earnings power of Goldman Sachs,” Solomon said in a press release.
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