Goldman Sachs and other major U.S. banks are kicking off first-quarter earnings season just a month after worries over the sector’s health rocked markets, putting results under an even brighter spotlight than usual.
Goldman Sachs (ticker: GS) results are expected before the opening bell on Tuesday. The bank is expected to report earnings of $8.14 a share on revenue of $12.76 billion, based on the estimates of analysts surveyed by FactSet.
Net interest income—a key measure of profit measuring the difference between interest earned on loans and paid on deposits—is expected to rise to $2.11 billion from $2.07 billion at the end of 2022. Revenue in the investment banking business, meanwhile, is seen falling to $1.44 billion from $1.87 billion in the fourth quarter of last year—perhaps a symptom of the deal making slowdown amid last month’s turmoil.
The March panic over banks—hot on the heels of the collapse of three U.S. lenders, including Silicon Valley Bank, the largest to fail since the 2008-09 financial crisis—was largely limited to regional groups. Nevertheless, results from Goldman and its peers on Wall Street will still be scrutinized by investors for what they say about dynamics in the embattled sector as well as the health of the wider U.S. economy.
Goldman is in good company, set to release results alongside Bank of America (BAC) and before Morgan Stanley (MS) on Wednesday. JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) got the ball rolling with earnings last Friday—impressing analysts and revealing that issues at smaller banks look to have been contained.
One element to watch in Goldman’s results is whether the bank, like peers including JPMorgan, saw deposit inflows in March as customers moved money from smaller banks to the Wall Street giants, seen as stronger and more strictly regulated.
How much money Goldman is setting aside for defaults—provisions for credit losses—will also be in focus amid worries of how the rapid rise of interest rates is making its way through to the real economy. Any outlook from the bank will also get investors’ attention, as well as guidance touching on the prospect of a credit crunch.
