Goldman Sachs smashes Q1 estimates with $4.74bn profit as equities, FICC deals surge

Goldman Sachs Q1 profit climbs to $4.74 billion as equities and structured debt deals drive performance

The Goldman Sachs Group, Inc. reported a sharp rise in first-quarter 2025 earnings, supported by strong performances across its Global Banking & Markets division, notably in equities and debt underwriting. Net revenues rose to $15.06 billion for the quarter ended March 31, 2025, representing a 6% increase year-over-year and a 9% jump sequentially. Net earnings attributable to common shareholders reached $4.58 billion, translating into diluted earnings per common share (EPS) of $14.12, up 22% from $11.58 in the prior-year period.

These results mark the third-highest quarterly net revenues in the firm’s history and signal a solid rebound from more challenging market conditions in 2023. The quarterly return on average common equity (ROE) stood at 16.9%, while the return on average tangible common equity (ROTE) improved to 18.0%, reflecting improved profitability on the firm’s core capital base.

What drove Goldman Sachs’ revenue growth in Q1 2025?

Goldman Sachs’ revenue growth in the first quarter was largely concentrated in its Global Banking & Markets business, which generated $10.71 billion in net revenues—10% higher than Q1 2024 and up 26% from Q4 2024. Within this division, the firm posted record net revenues in its equities business and saw continued momentum in its fixed income, currency and commodities (FICC) operations.

Equities net revenues reached $4.19 billion, up 27% from the year-ago quarter, driven by a strong pickup in both intermediation and financing. Derivatives activity boosted equities intermediation, while portfolio financing surged amid favourable market conditions. FICC net revenues came in at $4.40 billion, a modest 2% rise from Q1 2024, supported by robust structured lending and mortgage-related financing activity, even as trading in interest rate and credit products remained subdued.

Investment banking fees totalled $1.91 billion, down 8% year-over-year due to a decline in advisory revenues. However, debt underwriting helped offset the weakness, climbing to $752 million, aided by increased activity in investment-grade and asset-backed securities. The firm’s backlog for investment banking deals improved compared with the end of 2024, pointing to a potentially stronger pipeline ahead.

How did Goldman Sachs’ asset management arm perform this quarter?

The Asset & Wealth Management segment posted net revenues of $3.68 billion in Q1 2025, 3% lower than the same quarter last year and down 22% sequentially. The decline was largely attributed to weaker returns from equity and debt investments, as market volatility and valuation pressures continued to weigh on private and public equity holdings.

Notably, equity investments delivered a net loss of $5 million, compared to net gains in the prior year. Debt investments also fell sharply to $127 million in net revenues, impacted by both lower net interest income and valuation losses. However, management and other fee income rose to $2.70 billion, benefiting from higher average assets under supervision (AUS), which increased by $36 billion during the quarter to a record $3.17 trillion.

Private banking and lending revenues improved modestly to $725 million, reflecting higher net interest income. Incentive fees also rose to $129 million, driven by successful exits and fund performance across certain alternative assets.

How is the Platform Solutions unit evolving?

Goldman Sachs’ Platform Solutions segment, which includes consumer banking and transaction services, delivered $676 million in net revenues, slightly lower than Q1 2024 but broadly flat sequentially. Consumer platforms, which make up the bulk of this business line, contributed $611 million, while transaction banking and other services added $65 million.

The muted growth reflects the ongoing shift in Goldman Sachs’ retail banking strategy, following its decision to scale back its consumer ambitions after losses in previous years. Lower average deposit balances weighed on transactional revenue, although consumer lending remained steady. The firm’s pivot toward embedded finance and banking-as-a-service (BaaS) partnerships remains a key strategy under review.

What are the key takeaways from Goldman Sachs’ expenses and credit provisions?

Operating expenses totalled $9.13 billion in the first quarter, up 5% year-over-year and 10% from the previous quarter. The increase was driven by higher compensation expenses, reflecting improved profitability, and elevated transaction-based costs. However, consolidated investment entity impairments declined sharply, and there was a reduction in non-recurring items such as the FDIC special assessment fee booked in Q1 2024.

The provision for credit losses stood at $287 million, down from $318 million a year earlier. Most of the provisions were related to the firm’s credit card portfolio, while wholesale loan impairments, which were a feature of the prior-year quarter, did not recur at the same scale.

How is Goldman Sachs managing shareholder returns and capital deployment?

The firm returned $5.34 billion to shareholders during Q1 2025, including $4.36 billion through the repurchase of 7.1 million shares at an average price of $610.57 and $976 million in common stock dividends. On April 11, Goldman Sachs declared a quarterly dividend of $3.00 per share, payable on June 27, 2025.

The Board has also authorised a share repurchase program of up to $40 billion, reflecting the firm’s confidence in its capital position and long-term strategic outlook. Book value per share increased by 2.2% during the quarter to $344.20, underlining continued shareholder value creation.

Goldman’s average global core liquid assets (GCLA) grew to $441 billion in Q1 2025 from $422 billion in the prior quarter, further reinforcing its strong liquidity profile.

What are the broader financial metrics and regional performance trends?

Across the consolidated business, total non-interest revenues reached $12.17 billion, with market making contributing $5.72 billion and commissions and fees adding $1.23 billion. Interest income came in at $19.38 billion, while interest expenses were $16.49 billion, yielding a net interest income of $2.90 billion—more than doubling year-over-year.

Regionally, Goldman Sachs derived 66% of its revenues from the Americas, 23% from EMEA, and 11% from Asia. The geographic revenue mix remained broadly stable compared with previous quarters, with modest gains in EMEA contributing to the overall growth.

Tax efficiency also improved, with Goldman reporting an effective tax rate of 16.1% in Q1, down from 22.4% in 2024. The decline primarily reflected tax benefits on the settlement of employee share-based awards, which lifted diluted EPS by $1.63 and added two percentage points to ROE.

What is the investment sentiment around Goldman Sachs stock?

Goldman Sachs’ stronger-than-expected Q1 2025 results triggered a 2.22% rise in its stock price, closing at $505.40 on April 14. While the rally reflects renewed investor confidence, the stock remains approximately 14% below its 2025 high, suggesting residual caution tied to broader economic conditions.

Market analysts currently rate the stock as a “Hold,” with a significant share of investment banks advising clients to wait and watch. Out of 19 analysts covering the stock, 13 maintained a neutral stance, while six issued a “Buy” recommendation. The average 12-month price target stands at $661.93, with projections ranging between $550 and $782—implying a potential upside of roughly 16% from current levels.

Valuation metrics suggest the stock remains reasonably priced. Goldman’s price-to-earnings (P/E) ratio of 10.89 falls below the industry average of 15.60, pointing to a potential buying opportunity for long-term investors. However, its relatively high debt-to-equity ratio of 2.32 and a beta of 1.33 indicate increased exposure to financial and market volatility, which could weigh on performance during uncertain periods.

For investors seeking guidance, Goldman Sachs appears to be:

A “Buy” for those targeting undervalued banking stocks with strong capital markets exposure and robust buyback programs.

A “Hold” for current investors awaiting greater clarity on advisory recovery and macroeconomic stabilisation.

A “Sell” only for risk-averse stakeholders concerned about financial leverage and sector-wide turbulence.

With a blend of solid execution in Q1, a well-capitalised balance sheet, and improving fee income visibility, Goldman Sachs remains a key financial sector stock to watch heading into mid-2025.