(Bloomberg) --Goldman Sachs Group Inc.'s traders failed to capitalize on the fixed-income bonanza the rest of Wall Street generated last quarter, contributing to firmwide revenue that fell short of analysts' estimates and sending the shares down as much as 3.6%.
Fixed-income trading revenue declined 17%, the firm said in a statement Tuesday, leaving Goldman the only major Wall Street bank so far to have posted a drop for that business. Equities-trading revenue beat expectations, helping to soften the blow.
The bank also offloaded a chunk of its roughly $4 billion Marcus loan book, which led to a $440 million reserve release. That helped boost profit more than analysts expected, but earnings were still down 19% from a year earlier. Net revenue included a loss of approximately $470 million related to the partial sale of the portfolio and the transfer of the remainder to held-for-sale status.
Shares of New York-based Goldman dropped 2.4% to $331.60 at 7:32 a.m. in New York. The stock had lost 1.1% this year through Monday, compared with 2.9% drop for the S&P 500 Financials Index.
Most of the country's biggest banks have benefited from volatile markets that helped lift demand for trading services. Bank of America Corp. said earlier Tuesday that its fixed-income traders delivered a
Retail-banking giants such as JPMorgan Chase & Co. and Wells Fargo & Co. last week delivered higher earnings off rising interest rates. One pocket of concern for big investment banks remains the muted activity in capital markets as companies seek to ride out volatility, which has depressed fees for firms including Goldman Sachs.
Goldman blamed its poor performance in fixed-income trading on the currencies and commodities business. The revenue figure for the same period last year was up more than 20%.
The firm's provision for credit losses was a net benefit of $171 million for the first quarter, driven by the sale of the loan book. Analysts had expected that figure have hurt profit to the tune of $828 million.
Goldman took a profit hit of about $355 million related to its real estate investments.
The Wall Street giant's bankers and traders were also involved in the failed attempt to help Silicon Valley Bank raise funds, a trigger for the US regional banking crisis last month. The firm's investment bankers were out in the market seeking to raise capital for the smaller bank, while also purchasing a securities portfolio from the beleaguered company at a steep discount.
"The events of the first quarter acted as another real-life stress test, demonstrating the resilience of Goldman Sachs and the nation's largest financial institutions," Goldman Chief Executive Officer David Solomon said in the statement. "Our deeply rooted risk-management culture, strong liquidity and robust capital position enabled us to continue to support our clients and deliver solid performance."
(Updates with share reaction in fourth paragraph.)
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