April 13 (Reuters) - Goldman Sachs beat expectations for quarterly profit on Monday, driven by strength in dealmaking and equities trading, although its shares fell more than 4% on weakness in its fixed income, currencies and commodities division.
Revenue from the division fell 10% to $4.01 billion in the first quarter, hit by a slowdown in interest rate trading, mortgages and credit products.
"The stock is weak in premarket trading due to the disappointment in FICC trading, in our view," RBC Capital Markets analyst Gerard Cassidy said.
The drop in Goldman shares was also a drag on its peers, with Morgan Stanley and JPMorgan sliding about 1.3% each.
The bank's equities trading business, however, had a record quarter, with revenue from trading intermediation and financing rising 27% to $5.33 billion.
Global markets have been roiled by the Iran war as rising crude oil prices fan inflation fears and exacerbate worries about a recession.
The heightened volatility in the equities market has prompted clients to reassess portfolios and hedge downside risks, buoying equity trading desks at large banks.
"The geopolitical landscape remains very complex - so disciplined risk management must remain core to how we operate," Goldman Sachs CEO David Solomon said in a statement.
Overall, profit per share stood at $17.55, beating analysts' average estimate of $16.49, according to data compiled by LSEG.
M&A MARKET RESILIENT
Wall Street executives expect a strong year for mergers and acquisitions despite the current uncertainty from the Middle East conflict, as a softer stance on regulations under President Donald Trump's administration and the artificial intelligence boom are likely to underpin much of the activity.
Global M&A volumes hit $1.38 trillion in the first quarter, according to data compiled by Dealogic. Analysts at Jefferies noted that global M&A proxy fees rose 19% year-over-year to $11.3 billion, with Goldman leading the pack in market share.
The investment bank worked on some large deals in the first quarter, including advising Unilever on the planned merger of its food business with McCormick to create a $65 billion company, and Equitable's proposed tie-up with Corebridge to form a $22 billion insurer.
Its fees from investment banking rose to $2.84 billion in the first quarter, a 48% jump from a year ago.
"Investment banking trends were healthy as large-cap deal activity carried M&A transaction flow, while blockbuster IPOs remain in the summer and fall queue," said Stephen Biggar, a banking analyst at Argus Research.
BIG IPOs AWAITED
The IPO market has been hit by renewed uncertainty fueled by geopolitical tensions that have hurt risk appetite in equities, but some companies, especially those in industrials and defense, have pressed ahead with their listing plans.
Goldman has secured a spot as one of the lead banks managing SpaceX's blockbuster IPO expected in June, according to a Reuters report. The Elon Musk-led firm could raise $75 billion at a valuation of $1.75 trillion.
The listing is expected to set the stage for a flurry of bumper offerings this year, including the potential IPOs of OpenAI and Anthropic.
Goldman was among the joint book-running managers in PayPay's $880 million U.S. IPO, which valued the SoftBank-backed firm at $10.7 billion.
ASSET MANAGEMENT BUSINESS STURDY
Goldman's revenue from assets and wealth management rose 10% to $4.08 billion. The bank has prioritized the business to generate steadier income, reducing its reliance on more volatile trading and investment banking revenues.
The firm's private credit fund, housed under the division, defied an industry-wide spike in redemptions last week, where investors sought to repurchase just under 5% of shares in the first quarter - redemptions that did not breach its cap.
Fears that artificial intelligence could erode software companies' earnings and weaken their ability to service debt have rattled the multi-trillion-dollar private credit industry, prompting investors to seek liquidity with a rush of withdrawals.
Goldman completed its acquisition of active exchange-traded fund provider Innovator Capital Management earlier this month, lifting its total ETF assets under supervision to $90 billion.
Shares of the Wall Street giant have risen more than 3% so far this year, after a 53% jump in 2025.
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