Goldman Sachs Q1 Performance Significantly Beats Wall Street Expectations; Stock Trading Revenue Sets New Wall Street Record for Second Consecutive Quarter | Financial Earnings Insights

Goldman Sachs Group's stock trading division made history again, setting a new Wall Street record for the second consecutive quarter, with severe market volatility triggered by the Iran war serving as a key driver. On Monday, Goldman Sachs released its first-quarter 2026 financial report: First-quarter revenue from the equities division reached $5.33 billion, exceeding the previous record of $4.31 billion set in the fourth quarter of last year by over $1 billion. Boosted by this, the group's overall performance was strong: First-quarter net revenue was $17.23 billion, up 14% year-over-year and 28% quarter-over-quarter; net profit was $5.63 billion, up 19% year-over-year and 22% quarter-over-quarter. Diluted earnings per share (EPS) were $17.55, significantly higher than the $14.12 from the same period last year and the $14.01 from the previous quarter; Annualized return on equity (ROE) reached 19.8%, while book value per share rose to $361.19, a 1% increase quarter-over-quarter. Meanwhile, the investment banking business staged a strong rebound: investment banking fees totaled $2.84 billion, a 48% surge year-over-year, while merger and acquisition advisory revenue skyrocketed 89% year-over-year, indicating a significant recovery in completed M&A transaction volumes. In contrast, the Fixed Income, Currencies, and Commodities (FICC) business remained under pressure: FICC net revenue was $4.01 billion, down 10% year-over-year, primarily dragged down by interest rates, mortgages, and credit products, though commodities and foreign exchange performance offset some of the pressure. Goldman Sachs continued to return capital to shareholders at a robust pace: returning $6.38 billion to common shareholders in the first quarter (including $5 billion in buybacks), and announcing a quarterly dividend of $4.50 per share. Core Financials: Revenue and Profit Rise, but "Low Tax Rate" Contribution Cannot Be Ignored From the income statement perspective, Goldman Sachs reported pre-tax profit of $6.49 billion in the first quarter, up 15% year-over-year; net profit was $5.63 billion, up 19% year-over-year. However, the drop in the tax rate this quarter was a key variable amplifying profit growth: excluding the impact of approximately $895 million in tax benefits, the "add-on" to diluted EPS would be about $2.91. This means that EPS would fall from the "reported figure" of $17.55 to approximately $14.64, suggesting that the substance of the performance improvement lies more in the investment banking and equities businesses themselves. Regarding revenue structure, total net revenue for the quarter was $17.23 billion, comprising non-interest income of $13.67 billion and net interest income of $3.56 billion. Net interest income increased 23% year-over-year but decreased 4% quarter-over-quarter, reflecting that marginal improvements are no longer linear between asset-side yields and liability-side costs. Global Banking & Markets: Investment Banking Rebounds + Strong Equities Performance, FICC Still Slowing Year-Over-Year Global Banking & Markets net revenue was $12.74 billion, up 19% year-over-year and 22% quarter-over-quarter, serving as the absolute main driver of growth this quarter. Investment Banking: M&A Advisory Leads, Backlog Slightly Declines Investment banking fees were $2.84 billion, up 48% year-over-year. Among them, M&A advisory revenue was $1.494 billion, up 89% year-over-year, with the company explicitly pointing to a "significant increase in completed M&A volume." Equity underwriting was $535 million, up 45% year-over-year, primarily driven by convertible bond issuances. Debt underwriting was $811 million, up 8% year-over-year; investment-grade and asset-backed financing improved, but leveraged financing weakened significantly, offsetting the gains. The investment banking fee "backlog" declined "slightly" compared to the end of 2025, meaning the pace of future realization still needs observation. FICC: Interest Rates and Mortgages Drag Year-Over-Year, Commodities and FX Offset FICC net revenue was $4.01 billion, down 10% year-over-year, but up 29% quarter-over-quarter. The company attributed the year-over-year decline to weakness in interest rate products, mortgages, and credit products; however, significant strength in commodities and foreign exchange partially offset the pressure. FICC financing revenue was $1.062 billion, showing a slight year-over-year increase. Equities: High-Quality Financing Drives Surge in Financing Revenue Equities trading revenue was $5.33 billion, up 27% year-over-year. Equities financing revenue was $2.608 billion, up 59% year-over-year, primarily driven by high-quality financing; securities intermediary business (driven by cash products) also saw growth. In this combination of "trading + financing," Goldman Sachs continues to benefit from institutional client activity and asset volatility. In its statement, Goldman Sachs noted that major sources of market volatility this year include the Iran war, uncertainty in the artificial intelligence sector, and risk concerns in the private credit market. As one of the largest market-facing departments on Wall Street, Goldman Sachs benefited particularly significantly in a high-volatility environment due to its scale advantage. Asset Management & Wealth Management: Steady Management Fees, but Private Banking Squeezed by Deposit Spreads Goldman Sachs' asset management division also recorded steady growth. Net revenue from Asset Management & Wealth Management was $4.08 billion, up 10% year-over-year but down 14% quarter-over-quarter. Management and other fees were $3.077 billion, up 14% year-over-year, primarily driven by higher "Assets Under Management (AUM)." Private banking and lending revenue was $638 million, down 12% year-over-year; the company cited Marcus deposit spread compression as the reason, despite an increase in deposit balances. Incentive fees were $183 million, up 42% year-over-year, reflecting improved commissions driven by product performance. Investment income was $180 million, up 15% year-over-year, but fell sharply from the previous quarter ($670 million), dragging down the segment's quarter-over-quarter performance. Regarding assets under management, the total stood at $3.65 trillion as of the end of the first quarter, an increase of approximately $44 billion from the end of 2025; net inflows for the quarter were $87 billion, but market volatility resulted in a net valuation drawdown of approximately $43 billion. However, the business is not without risks. Earlier in April, Goldman Sachs disclosed that one of its private credit funds had narrowly avoided a large-scale wave of investor redemptions before resolving the situation. Platform Solutions: Escaping Last Quarter's "Deep Pit," but Apple Card Remains a Key Variable Net revenue from Platform Solutions was $411 million, lower than the $610 million from the same period last year, but a significant repair compared to the -$1.676 billion from the previous quarter. The company explained that last year it transferred the Apple Card loan portfolio to "held-for-sale," and the related net revenue included net impairments; the year-over-year decline this quarter is primarily related to this factor. Credit Losses & Costs: Provisions Return to "Normal Range," Expenses Rise with Business Volume Credit loss provisions were $315 million, slightly up year-over-year (compared to $287 million last year), mainly related to growth in wholesale loans and impairments; the $2.12 billion "net reversal/net gain" in the previous quarter was a base effect caused by the credit card portfolio being transferred to held-for-sale. Operating expenses were $10.43 billion, up 14% year-over-year, with an efficiency ratio of 60.5%, roughly flat with the same period last year. The rise in expenses was primarily driven by: A significant year-over-year increase in trading-related expenses; Compensation and benefits up 11% year-over-year, reflecting the increase in variable compensation due to improved operational performance. Net provision for litigation and regulatory matters was $42 million, weaker than the "net reversal" from the same period last year. Employee headcount was approximately 47,000, basically unchanged from year-end. Capital, Leverage & Liquidity: Aggressive Buybacks, Capital Adequacy Ratios Downward Trend Warrants Attention Goldman Sachs returned $6.38 billion to common shareholders in the first quarter, including $5 billion in buybacks (approximately 5.4 million shares at an average price of $923.49), and announced a quarterly dividend of $4.50 per share. The balance sheet expanded concurrently: total assets rose from $1.81 trillion at the end of 2025 to $2.06 trillion, with deposits reaching $561 billion. Corresponding to this balance sheet expansion, risk-weighted assets increased, combined with capital returns, causing capital metrics to decline: CET1 capital was $101.7 billion (down from year-end); the Standardized CET1 ratio fell to 12.5% (14.3% at year-end); the Advanced Internal Ratings-Based (AIRB) CET1 ratio was 13.4% (15.1% at year-end); the Supplementary Leverage Ratio (SLR) was 4.6% (5.2% at year-end). Regarding liquidity, the quarterly average of Global Core Liquid Assets (GCLA) was $494 billion, higher than the previous quarter's $479 billion. Risk levels are also rising: average daily Value-at-Risk (VaR) rose to $112 million (from $80 million in the previous quarter), with interest rate and commodity risks contributing more noticeably.