Goldman Sachs rises after surge in trading revenue amid market volatility drives 1st-quarter earnings beat

• Goldman Sachs shares jumped 2% Thursday after it reported an earnings beat in the first-quarter.
• The investment bank reported Q1 earnings per share of $10.76, beating estimates by $1.81.
• Goldman said a decline in its investment banking revenue was offset by its consumer and wealth management divisions.
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Goldman Sachs stock jumped 2% on Thursday after the investment bank beat revenue and income estimates in its first-quarter earnings report.

The bank saw a substantial year-over-year decline in its investment banking and asset management revenues, in part due to a complete shut down of the IPO market as stocks experienced a surge in volatility amid the Fed's interest rate hiking cycle. But those declines were offset by strength in its trading and wealth management divisions.

Here were the key numbers:

Revenue: $12.9 billion, versus analyst expectations of $11.8 billion
Earnings per share: $10.76, versus analyst expectations of $8.95
Provision for credit losses: $561 million, compared to a benefit of $70 million in Q1 2021

Goldman's Global Markets business saw revenue jump 4% year-over-year to $7.87 billion in the quarter. Those results were driven by a 21% surge in Goldman's fixed income, currencies, and commodities trading division, as the bank was able to take advantage of ongoing market volatility. Meanwhile, revenue from the bank's equities division within Global Markets fell 15% year-over-year to $3.15 billion.

Goldman's investment banking revenue fell 36% year-over-year to $2.41 billion, as IPO underwriting significantly slowed down, "reflecting a significant decline in industry wide activity," Goldman said. Asset management revenues fell 88% year-over-year to just $546 million, reflecting net losses in equity investments and lower revenues from lending and debt investments.

But strength in Goldman's consumer and wealth management division helped offset the revenue decline seen in investment banking and asset management. The firm's wealth management division saw revenue jump 21% year-over-year to $2.1 billion, in part driven by higher management fees and higher assets under management.

Goldman also reported a spike in its provision for credit losses in the first quarter to $561 million, mainly due to rising consumer credit card balances and the impact of macroeconomic and geopolitical concerns. Goldman's provision for credit losses was only $344 million in its fourth quarter.

First-quarter operating expenses fell 18% year-over-year to $7.72 billion. The decrease reflects lower compensation and benefits expenses for its employees.

"The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill. Despite the environment, our results in the quarter show we continued to effectively support our clients and I am encouraged that our more resilient and diversified franchise can generate solid returns in uncertain markets," Chairman and CEO David Solomon said.