Goldman Sachs (GS 220.50, -5.76) is down 2.6% in pre-market after missing earnings expectations for the first quarter. Hoping to offset the impact of its disappointing results, Goldman Sachs raised its quarterly dividend to $0.75 per share from $0.65 per share.
The investment banking giant reported below-consensus first quarter earnings of $5.15 per share on revenue of $8.03 billion, which jumped 26.6% year-over-year, but did not live up to market expectations.
Annualized return on average common shareholders' equity was 11.4%, in line with the fourth quarter rate. Book value per common share increased 1.4% to $184.98. Global core liquid assets totaled $222 billion at the end of March, down from $226 billion in the previous quarter.
Broadly speaking, higher net revenues in mortgages & rates trading offset lower revenues in credit, commodities, and currencies.
Looking at the segment breakdown, Investment Banking revenue increased 16.0% year-over-year to $1.70 billion while Financial Advisory revenue declined 2.0% to $756 million. The decline in Financial Advisory revenue was due to lower merger and acquisition levels. Underwriting revenue grew 37.0% to $947 million thanks to higher equity and debt underwriting activity.
Institutional Client Services revenue declined 2.0% to $3.36 billion. Fixed Income, Currency, and Commodities Client Execution revenue totaled $1.69 billion, which was little changed year-over-year. Higher net revenue in mortgages and higher net revenue in interest rate products offset lower net revenues in commodities and currencies and lower revenues in credit products. Equities net revenue declined 6.0% year-over-year to $1.67 billion due to lower net revenues in commissions and fees and lower volumes that were partially offset by higher revenues in equities client execution.
Investing & Lending revenue surged to $1.46 billion from $87 million one year ago. A significant increase in net gains from investments in public & private equities and higher global equity prices contributed to the increase. There was also a significant increase in gains from investments in debt instruments and net interest income.
Investment Management revenue grew 12.0% to $1.50 billion. Higher incentive, management, and other fees drove the growth rate. Management and other fees grew, reflecting higher average assets under supervision. Long-term assets under supervision rose $29 billion while liquidity products decreased $35 billion.
Operating expenses grew 15.0% year-over-year to $5.49 billion. Compensation and Benefits Expenses increased 24.0% year-over-year to $3.29 billion while Non-Compensation Expenses rose 5.0% to $2.20 billion.
Shares of Goldman Sachs have struggled so far in 2017 and today's pre-market decline leaves the stock down 7.9% for the year versus no change in the broader financial sector.