-- Goldman Sachs (GS) posted first-quarter results above market estimates, while Chief Executive David Solomon said a protracted Middle East conflict could pose upside risks to inflation.
The lender reported earnings of $17.55 a share for the March quarter, climbing from $14.12 a year earlier and topping the FactSet-polled consensus of $16.47. Net revenue advanced 14% to $17.23 billion, exceeding the Street's view for $16.99 billion.
Shares of the bank were down 3.6% in Monday trade.
"As the quarter progressed, the macro environment started to weigh on sentiment (as) volatility increased meaningfully amid concerns around (artificial intelligence-driven) disruption and sectors like software, heightened uncertainty in parts of private credit and the conflict in the Middle East," Chief Executive David Solomon said on an earnings conference call, according to a FactSet transcript.
Energy prices have soared in the aftermath of the US-Israel war with Iran that began at the end February. While the US and Iran have agreed to a temporary ceasefire, the two sides were unable to reach a deal during negotiations in Pakistan over the weekend.
"At this point, the underlying economy still remains relatively robust," Solomon told analysts. "But if the resolution of the conflict drags, that probably will be a headwind in some of these areas, particularly inflation trends."
While Solomon forecasts a more constructive regulatory backdrop this year, he said the geopolitical landscape remains "very complex."
The US Central Command said Sunday that military forces will begin implementing a blockade of maritime traffic entering and exiting Iranian ports on Monday.
Investment banking fees in the first quarter benefited from a boost in completed merger and acquisition volume, though initial public offering "activity slowed a little bit, particularly in March," due to the Middle East conflict, Solomon told analysts.
Revenue in Goldman's global banking and markets segment increased 19% year on year to $12.74 billion. Investment banking fees surged 48% amid significantly higher revenue in advisory and equity underwriting. Fixed income, currencies and commodities revenue fell 10%.
Revenue in the asset and wealth management segment grew 10% to $4.08 billion, reflecting higher management and other fees, partially offset by lower private banking and lending revenue.
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