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Goldman Sachs Misses Q1 Profit Forecast as Credit Provisions Surge; Posts Solid Revenue Gains in Global Markets

Goldman Sachs said market volatility pushed big gains in trading revenues, but noted credit loss provisions tripled from last year as the coronavirus pandemic hit its loan book.

Goldman Sachs Group  (GS) - Get Report posted weaker-than-expected first quarter earnings Wednesday but noted solid gains in revenues from its trading division and a record increase in customer deposits. 

Goldman's net credit loss provision for the quarter, however, was $937 million, a more than three-fold increase from the first quarter of last year "as a result of continued pressure in the energy sector and the impact of COVID-19 on the broader economic environment," the bank said. 

Goldman Sachs said earnings for the three months ending in March were pegged at $3.11 per share, down 46% from the same period last year and well shy of the Street consensus forecast of $3.35 per share. Net revenues of $8.74 billion were modestly lower from last year but topped analysts' estimates of a $6.75 billion tally.

The revenue beat was boosted by solid gains in fixed income and commodities trading, where revenues rose 33% to $2.97 billion, Global markets revenues, in fact, jumped 28% from last year to $5.16 billion and customer deposits rose by a record $12 billion, Goldman said. 

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"I am enormously proud of the determination and dedication of the people of Goldman Sachs, who continue to serve our clients despite high market volatility," said CEO David Solomon. "Our quarterly profitability was inevitably affected by the economic dislocation." 

"As public policy measures to stem the pandemic take root, I am firmly convinced that our firm will emerge well-positioned to help our clients and communities recover,” he added.

Goldman Sachs shares were marked 3.8% lower in early trading following the earnings release to change hands at $171.88 each, a move that would extend the stock's year-to-date decline to around 26%.