Q1 2025 Earnings Summary
- Macroeconomic and regulatory uncertainty: Clients are showing increased caution amid volatile global trade policies and slowing growth projections, which could lead to a delay or reduction in deal activity and overall weaker revenue performance. This uncertainty was a recurring theme, with executives highlighting challenges in predicting market outcomes and clients hesitating on capital-intensive decisions .
- Capital allocation and buyback risks: The heavy reliance on large-scale share buybacks and returning capital—if earnings growth or opportunities for reinvestment falter, it could impact long-term growth and shareholder value. Executives emphasized a strategic focus on buybacks when excess capital is available, but this may leave the firm vulnerable if market conditions deteriorate .
- Pressure on financing and deleveraging dynamics: The observed significant deleveraging and fluctuations in financing balances, driven by changing asset prices and portfolio adjustments, could disrupt financing revenues and compress margins if asset prices reset unfavorably. Recent Q&A responses indicated that while financing activity remains robust, these adjustments pose risks to future revenue consistency .
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +6% (Q1 2025: $15,062M vs Q1 2024: $14,213M) | Total Revenue increased by 6% as higher Global Banking & Markets and Investment Management revenues offset softer performance in Investment Banking. This growth builds on the strong sequential gains seen in Q1 2025 relative to Q1 2024. |
Global Banking & Markets | +10% (Q1 2025: $10,707M vs Q1 2024: $9,726M) | GBM grew by 10% YoY due to higher FICC and Equities revenues—driven by increased financing activities (including improved performance from the newly integrated Capital Solutions Group) which built on the momentum from previous periods. |
Investment Banking | -8% (Q1 2025: $1,914M vs Q1 2024: $2,085M) | Investment Banking declined by 8% YoY primarily because of a significant drop in Advisory revenues compared to a strong Q1 2024, despite some offset from higher Debt Underwriting activity. |
Investment Management | +11% (Q1 2025: $2,759M vs Q1 2024: $2,491M) | Investment Management increased by 11% YoY driven by higher management and other fees, reflecting growth in average assets under supervision due to strong net inflows and market appreciation relative to the prior period. |
Net Earnings | +15% (Q1 2025: $4,738M vs Q1 2024: $4,132M) | Net Earnings improved by 15% YoY as a result of higher total net revenues and enhanced performance in key segments, combined with better cost control and operating efficiencies compared to Q1 2024. |
Americas | +7.5% (Q1 2025: $9,866M vs Q1 2024: $9,181M) | Americas revenue grew by 7.5% YoY, benefiting from robust market activity and strong performance in revenue-generating segments within the region, continuing the positive trends seen in previous periods. |
Asia | +9% (Q1 2025: $1,705M vs Q1 2024: $1,562M) | Asia’s revenue increased by 9% YoY due to incremental improvement in regional market conditions and higher transaction activity, further building on the steady performance observed in Q1 2024. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Tax Rate | FY 2025 | 20% | 21% | raised |
Asset & Wealth Management | FY 2025 | Expected to grow at high single digits annually | High single-digit annual growth | no change |
Incentive Fees | FY 2025 | Targeting $1 billion annually | Aims to achieve $1 billion annually | no change |
Fundraising for Alternatives | FY 2025 | Expected to remain consistent with recent years; $72 billion in 2024 | Expected to remain in line with recent years | no change |
Historical Principal Investments (HPI) | FY 2025 | no prior guidance | Goldman Sachs plans to continue reducing its historical principal investments. By the end of 2026, the vast majority of exposures are expected to be sold down | no prior guidance |
Efficiency Plan | FY 2025 | no prior guidance | Executing a 3-year efficiency plan including adjustments to its pyramid structure and leveraging technology and automation | no prior guidance |
Capital Deployment | FY 2025 | no prior guidance | Committed to paying a sustainable and growing dividend and a multiyear share repurchase program of up to $40 billion | no prior guidance |
Economic Outlook | FY 2025 | no prior guidance | Economists expect U.S. growth to fall from over 2% to 0.5%, with an increased prospect of a recession | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
AWM Management & Other Fees Growth | Q1 2025 | Expected to grow at high single digits annually | Increased by ~10.8% from 2,491In Q1 2024 to 2,759In Q1 2025 | Beat |
Tax Rate | Q1 2025 | Expected to be approximately 20% | ~16.1% (calculated from provision for taxes of 909÷ pre-tax earnings of 5,647) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Regulatory, Macroeeconomic & Capital Requirement Uncertainty | Discussed in Q2, Q3, and Q4 2024 with emphasis on regulatory opacity (e.g. stress testing and Basel III uncertainties), capital buffers, and macro uncertainties such as slowing growth and trade policy risks. | Q1 2025 discussions focus on cautious optimism about potential regulatory reforms, improved capital buffers (e.g. CET1 at 14.8%), and significant macroeconomic concerns including near-term recession risks. | Consistent focus across periods with an evolving sentiment – earlier discussions were more defensive and regulatory-focused while Q1 2025 shows proactive capital deployment and optimism for reforms. |
Capital Management & Share Buyback Strategies | Q2, Q3, and Q4 2024 emphasized a prudent capital buffer, moderated buybacks due to increased SCB requirements, and consistent returns to shareholders through dividends and repurchases. | Q1 2025 highlighted record buybacks, a clear $40 billion repurchase program, and disciplined capital allocation to support client activity and dividend growth. | Persistent commitment to returning capital with an increased emphasis on record buybacks in Q1 2025, indicating continued confidence despite regulatory changes. |
M&A Activity & Investment Banking Performance | In Q2, Q3, and Q4 2024, performance was noted as solid yet cyclical – with M&A volumes below historical averages, strong backlog growth, and leadership in advisory and underwriting despite market challenges. | Q1 2025 reaffirmed the firm’s #1 global M&A adviser status, showcasing marquee deals and elevated client dialogues despite market volatility. | Steady leadership with cyclical pressures; sentiment remains upbeat on future activity, reinforcing a top market position and growing backlog despite transient volume lags. |
Return on Equity (ROE) & Profitability Challenges | Q2 and Q3 2024 reported ROE in the low teens or even around 10–11% with noted drag from non-core activities (e.g. consumer business and HPI exposures) and margins under pressure. Q4 2024 saw moderate improvement (14.6% for Q4). | Q1 2025 reported a ROE of 16.9% with strong performance in Global Banking & Markets, though some challenges remained in Asset & Wealth Management and investment banking due to selected items. | Gradual improvement in profitability metrics – the upward movement in ROE from single digits to near-high teens indicates effective strategic adjustments and cost management, generating more positive sentiment. |
Financing Revenue Growth & FICC Performance | Q2, Q3, and Q4 2024 consistently reported record or near-record financing revenues and robust FICC performance driven by mortgages, structured lending and improvements in rates and currencies. | Q1 2025 maintained this momentum with record financing revenues (22% YoY increase) and strong FICC net revenues complemented by solid performance in fixed financing. | Steady and record-breaking growth across periods with a durable revenue base; Q1 2025 builds on the strong foundations, confirming strategic strength in FICC and financing operations. |
Private Credit, Private Banking & Wealth Management Expansion | Q2 and Q3 2024 highlighted significant fundraising for alternatives (private credit), growth in private banking revenues, and expanding wealth management assets with a rising adviser footprint and record client assets around $1.5–$1.6 trillion. | Q1 2025 further underscored this expansion, with $19 billion raised in alternative investments, record wealth management client assets at $1.6 trillion, and strong industry recognition as the firm expands its ultra-high-net-worth franchise. | Robust growth continues with an evolving emphasis on scaling private credit and wealth management capabilities, reflecting an integrated expansion strategy supported by strong capital-raising performance. |
Geopolitical, Policy & Cyber Risks | In Q2 and Q3 2024, there were repeated mentions of geopolitical instability and policy uncertainties (elections, trade policies) while cyber risk was not specifically discussed until Q4 2024. | Q1 2025 again discussed significant global uncertainty and policy volatility affecting growth prospects, but notably omitted cyber risk from the conversation. | Consistent concerns about geopolitical and policy risks persist; however, the explicit focus on cyber risks diminished in Q1 2025, signaling a relative de-emphasis compared to earlier calls. |
Platform Solutions & Apple Partnership Challenges | Q3 2024 briefly noted the narrowing of the consumer footprint with minimal details on the Apple Card, while Q2 2024 did not address this topic. Q4 2024 provided detailed commentary on the Apple partnership's ROE drag and plans for eventual exit. | Q1 2025 contained no mention of Platform Solutions or Apple Partnership challenges. | Disappearance of the topic in Q1 2025 suggests a strategic de-emphasis on consumer platforms like the Apple Card, possibly reflecting a completed transition away from non-core activities. |
Consumer Revenue Slowdown & Underwriting Adjustments | Q2 2024 discussed a modest slowdown in consumer platform fees and adjustments in underwriting for card originations; Q3 2024 addressed an 80 basis point ROE drag from consumer-related activities. | Q1 2025 did not mention consumer revenue slowdown or adjustments, and Q4 2024 also had no specific commentary on these issues. | Reduced focus on consumer revenue and underwriting changes in later periods indicates that attention may have shifted to other growth areas, potentially due to successful adjustments or a strategic pivot. |
Competition & Trading Market Share Pressure | Q2 and Q3 2024 featured discussions of intense competition and market share pressure in trading, highlighting a strong integrated approach and emphasis on electronic trading capabilities, with confidence in existing market leadership. Q4 2024 mentioned sponsor market share indirectly. | Q1 2025 acknowledged competitive pressures but underscored strong trading performance with record revenues and a resilient client base. | Continued competitive environment yet with improved market performance and confidence; the firm leverages its scale and integrated model to maintain leadership despite ongoing market share pressures. |
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Capital Deployment
Q: How much capital can free up on disposal?
A: Management noted the HPI portfolio holds about $4 billion and a similar amount exists in the credit card portfolio, which provides context for the capital that could be freed if these assets are disposed of. -
Share Buyback
Q: What drove the record buyback?
A: The record share repurchase was driven by strong earnings generation and disciplined capital management—ensuring that after supporting client activity the firm could return excess capital to shareholders. -
Tax Rate Guidance
Q: What is the normalized tax rate arrangement?
A: Management expects a normalized tax rate around 21%, particularly for the fourth quarter and full-year guidance, reflecting the adjusted outlook beyond one-off benefits. -
Regulatory SLR
Q: How could SLR reform affect capital efficiency?
A: Although currently not constrained by the SLR, potential regulatory reform—including removing treasuries from the denominator—is expected to boost capital efficiency and lower funding costs, benefiting the industry overall. -
HPI Reduction
Q: What is the target for reducing HPI exposure?
A: The firm has reduced historical principal investments from roughly $30 billion to about $8 billion and aims to continue this sell-down, largely concluding by the end of 2026. -
Deleveraging Impact
Q: What is the effect of deleveraging on financing?
A: Management described the deleveraging process as a material factor; while asset price resets lower prime balances, client financing needs remain robust, supporting an active financing platform. -
Efficiency Initiatives
Q: How is the firm managing cost and capital efficiency?
A: Leadership is executing a 3‑year efficiency plan focused on optimizing risk‐weighted assets and cost structures, which includes expected actions like a planned severance charge to streamline operations. -
Deal Backlog Outlook
Q: What is the outlook for deal backlog amid uncertainty?
A: Despite greater market uncertainty, the deal backlog has increased as companies rethink strategies, signaling continued robust M&A activity even if some timing delays occur. -
Global Uncertainty
Q: Is U.S. uncertainty greater than abroad?
A: Management observes that while short‑term concerns seem more pronounced outside the U.S., global client engagement remains very strong and the firm’s worldwide franchise continues to perform well. -
Sponsor Activity
Q: How are sponsors influencing alternative fundraising?
A: Although sponsors face pressure due to slower capital returns, management believes that long‑term secular growth in private assets remains intact, supporting continued fundraising and investment activity.