Goldman Sachs' Wealth, Asset Arm Logs Big Earnings Jump

Editorial Staff

16 April 2024

The asset and wealth management arm of reported a 43 per cent year-on-year jump in first-quarter 2024 pre-tax earnings, coming in at $877 million.

Wealth management fees rose 7 per cent to $1.339 billion; asset management fees rose 8 per cent to $1.113 billion. Incentive fees surged 66 per cent to $88 million, while private banking and lending net revenues jumped 93 per cent to $682 million. The effect was magnified by the sale last year of the Marcus loans portfolio, the Wall Street firm said in a statement yesterday.

Equity investments net revenues rose 87 per cent to $222 million; with debt investments, revenues fell 15 per cent to $345 million. Across the whole of the wealth and asset management arm, net revenues rose 18 per cent to $3.789 billion.

Operating expenses at this business division fell 7 per cent on a year ago to $2.934 billion. The division’s return on average common equity rose 4.2 percentage points to 9.9 per cent.

The wealth management side of the division had client asset of about $1.5 trillion at the end of the quarter. Across the whole division, assets under supervision stood at $2.848 trillion, up from $2.672 trillion, Goldman Sachs said.

Goldman Sachs broke down the split of assets to show how many are held in the “alternatives” space (hedge funds, private equity, venture capital, real estate, etc). Out of the $2.848 trillion assets under supervision (AuS) total, $296 billion was in alternatives; $713 billion in equities; $1.141 trillion in fixed income and $698 billion in liquidity products. Regionally, the Americas accounted for the vast majority of AuS, at 70 per cent, with Europe, Middle East and Africa at 23 per cent and Asia at 7 per cent.

Goldman Sachs as management and other fees from alternative assets fell 2 per cent on the year.

Group results
Across the whole of Goldman Sachs, pre-tax earnings rose 31 per cent year-on-year to $5.237 billion; net revenues rose 16 per cent to $14.2 billion; operating costs rose 3 per cent. There was a $318 million provision for credit losses in the first quarter, against a $45 million net release a year before.

The firm said it had a standardized Common Equity Tier 1 capital ratio of 14.7 per cent.

The headline figures broadly cheered investors; shares in Goldman Sachs ended 2.92 per cent higher yesterday. Various media reports said improved underwriting fees - coinciding with a slew of debt issuance in the quarter - helped to buoy earnings. Expectations that the US Federal Reserve would start to trim interest rates this year boosted issuance (although recent inflation figures might have caused the Fed to delay such cuts for several months).