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Goldman Sachs has announced a higher-than-expected 28 per cent rise in profits for the first quarter. The Wall Street bank reported a net income of $4.1bn, up from the $3.2bn reported during the same period last year. This figure exceeded the expectations of financial analysts by nearly $1bn, according to data compiled by Bloomberg.
Goldman’s performance was largely attributed to the bank’s strong showing in its trading business. Revenues in both its equity and fixed-income trading departments soared by 10 per cent, outpacing gains reported last week by competitors such as JPMorgan and Citi.
Goldman’s investment banking business also witnessed an uptick, achieving its best quarter in two years with revenues reaching $2.1bn. These gains were in part driven by a resurgence in mergers and acquisitions, as the market saw a doubling in the number of takeovers valued at $10bn or more compared to the same period last year.
Furthermore, the bank’s asset and wealth management division reported robust revenue growth, climbing 18 per cent from the previous year to $3.8bn.
CEO David Solomon, who has faced criticism in the past for a failed push into consumer banking that cost Goldman billions, attributed the success to a focus on core strengths and a realignment of priorities towards investment banking and trading businesses.
Solomon expressed optimism about the market’s prospects, stating that Goldman continues to be “constructive on the health of the US economy”. However, he cautioned about lingering uncertainties such as inflation, weakness in commercial real estate and geopolitical tensions, which he said could “slow growth”.
Oppenheimer analyst Chris Kotowski hailed Goldman’s results as “near perfect”. The bank’s stock rose by 3 per cent on receipt of the news on Monday.
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Austria’s Raiffeisen Bank International has apparently contradicted its pledge to exit Russian markets with the posting of dozens of advertisements for Russia-based jobs, indicating its plans to grow in the country.
The Financial Times analysed over 2,400 job advertisements posted in Russia by the bank since December, finding a significant portion dedicated to sales management and customer service roles.
According to the FT, one of the job postings issued by RBI stated that its “key goals are a multiple expansion of the active client base and stable double-digit income growth”. Another job posting for payroll services mentioned that the bank is “actively expanding our base of corporate clients”. Several more job postings, highlighting the bank’s growth strategy in Russia, were reported by the FT.
In response to the FT’s investigation, RBI said CEO Johann Strobl ordered an immediate inquiry. According to a report delivered to Strobl by the bank’s Russian subsidiary, RBI attributed the contradictory job postings to outdated boilerplate information about its Russian ambitions, which had not been updated since Russia’s invasion of Ukraine.
RBI said in a statement: “The reduction of the Russian business will continue in 2024. Raiffeisen continued to work on a potential transaction, a sale or a spin-off, which would result in the de-consolidation of Raiffeisenbank Russia from the group.”
The bank added that the advertisements, “do not reflect the measures taken by RBI to reduce its Russian business, nor do they correspond to the future plans for the Russian business”.
Despite pressure from regulatory bodies such as the European Central Bank and the US Treasury, RBI remains one of the largest western banks operating in Russia.
RBI’s executives find themselves in a challenging position regarding their operations in Russia. Profits made in the country cannot be repatriated and any sale of the business would require Kremlin approval. Executives stress that the bank aims to maintain functionality in Russia to attract potential buyers while avoiding direct support for the Russian wartime economy.
However, the FT noted that RBI is the only western bank still operating in Russia to have increased its headcount. In response, RBI attributed the increase in headcount to an IT department expansion, which it said aims to establish a standalone IT architecture for a potential sale of its Russia unit.
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China’s economic growth has exceeded expectations in the first quarter of the year, driven primarily by robust growth in high-tech manufacturing.
According to China’s National Bureau of Statistics, its gross domestic product expanded by 5.3 per cent in the first quarter, surpassing the estimated 4.6 per cent growth from a recent Reuters poll of economists. The growth also marked an acceleration from the 5.2 per cent expansion recorded in the preceding three months.
Sheng Laiyun, a spokesperson for the NBS, noted that the Chinese economy had a promising start in the first quarter, laying a strong foundation for achieving its annual target of 5 per cent GDP growth. However, he cautioned that “the foundation for economic stability and improvement is not yet solid”.
According to data from the NBS, industrial production saw a notable increase of 6.1 per cent year on year in the first quarter, driven by robust growth in high-tech manufacturing sectors.
However, the world’s second-largest economy continues to grapple with a property sector downturn, mounting local government debt and weak private-sector spending.
The latest data showed that China’s property sector continued to struggle in the first quarter, with residential real estate investment dropping 10.5 per cent year on year.
Last week, Fitch Ratings downgraded China’s sovereign credit outlook to negative, citing “property-reliant growth” as “increasing risks to China’s public finance outlook”.
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BNP Paribas has received regulatory approval to establish a fully owned securities brokerage in China.
The China Securities Regulatory Commission announced that BNP Paribas’s securities business had been greenlit in Shanghai, with registered capital of Rmb1.1bn ($152mn).
The approved scope of the business includes brokerage, proprietary trading, investment consulting and securities asset management.
China’s decision in 2021 to allow foreign banks full ownership of their securities businesses has prompted several Wall Street banks, as well as European rivals such as Standard Chartered, to pursue similar ventures. Notably, JPMorgan and Goldman Sachs were among the first to capitalise on these relaxed regulations three years ago.
BNP Paribas, confirming the approval on Monday, said in a statement: “BNP Paribas welcomes this decision from the China regulators and remains committed to exploring opportunities for growth in the China market, where the bank has had a long-standing presence.”
The Paris-headquartered bank’s expansion into China reflects a renewed effort to penetrate the local market following the dissolution of its joint venture with Changjiang Securities in 2007.
In addition to its securities brokerage venture, BNP Paribas currently holds a 13.8 per cent stake in Nanjing City Commercial Bank and operates a wealth management joint venture with Agricultural Bank of China, in which it holds a 51 per cent stake.
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The Partnership for Carbon Accounting Financials, which aims to standardise the way financial institutions measure and report financed greenhouse gas emissions, facilitated emissions and insurance-associated emissions, has announced the launch of its Brazil chapter.
Currently, more than 450 financial institutions have subscribed to the PCAF initiative.
Co-chaired by Itaú Unibanco and Banco Bradesco, two of Brazil’s largest lenders, the Brazil chapter will facilitate collaboration among the 13 Brazilian financial institutions committed to PCAF reporting standards.
Angélica Afanador, executive director of PCAF, said in a statement, “The launch of the PCAF Brazil chapter is testament to the progress being made in emissions reporting across Latin America. Driven by Brazilian financial institutions, supported by the PCAF secretariat, the Brazil chapter will look to continue this momentum and facilitate national collaboration.”
