EPS of $4.02 compares with $4.29 a year ago and $4.60 in Q4. Revenue of $9.33B falls from $10.09B. Annualized ROE of 10.9% in Q1.
Investment banking revenue of $1.78B up 13% Y/Y, with financial advisory revenue of $682M up 41%, equity underwriting revenue of $437M up12%, debt underwriting of $660M down 5%.
Institutional client services revenue of $4.446B down 13% Y/Y, with FICC revenue of $2.85B down 11%, not terribly out of line with dim expectations, but Morgan Stanley and BofA managed to report gains in this segment (Citi and JPMorgan had declines). Given the fixed to shrinking pie size, Goldman lost some share during the Q.
Investing & Lending revenue of $1.529B downb 26% Y/Y. Investment management revenue of $1.152B up 9%.
Operating expenses of $6.31B off 6% from a year ago, with compensation and benefits expense of $4.01B down 8%. Compensation and benefits as a percentage of revenue of 43% is flat. Total headcount down 1% during the quarter.
Q1 net income from continuing operations of $232M or $0.26 per share compares to $196M or $0.21 one year ago.
Adjusted average loans up 5.5%, with 8.9% growth in commercial, financial, and ag loans. Average deposits up 3.3%.
Net interest income of $569M falls 3.4% Y/Y, with NIM sliding 24 bps to 3%. Noninterest income of $435M up 2.4% Y/Y, with investment banking and debt placement fees of $84M up 6.3% and mortgage servicing fees of $15M up 87.5%. Service charges on deposit accounts of $63M off 8.7%.
Noninterest expense of $662M falls 2.8% from a year ago. Efficiency ratio is at the very top of the targeted 60-65% range (higher is worse).
Tier 1 common equity ratio of 11.22%. 9.8M shares repurchased in Q1 (total float is 890M shares).
AUM of $4.4T up 12% Y/Y. Adjusted operating income of $1.062B up 15%. Operating margin of 41.4% up 140 basis points. Diluted EPS of $4.43 up 21%.
$26.7B of long-term net inflows in Q1. "Significant change" in the fixed income landscape ... "We continue to witness a shift towards unconstrained fixed income and increased usage of liability driven investing as large pension plans take advantage of strong equity markets and improved funding ratios to immunize their portfolios."
iShares: Q1 net inflows of $7.759B brings AUM to $930.4B. AUM represents 23% of total firm AUM, and base fees of $765M represent 35% of firm-wide fees.
Morgan Stanley (MS) was firing in Q1, with revenue (excl. DVA adjustment) of $8.8B up from $8.5B a year ago, and income from continuing operations of $1.4B or $0.68 per share comparing to $1.2B or $0.60 per share a year ago.
Wealth Management pre-tax income of $691M on revenue of $3.62B compares to $597M on revenue of $3.47B in last year's Q1. Pre-tax margin of 19%.
Even FICC is cranking, with revenue of $1.7B up from $1.5B a year ago. This compares to declines at Citi and JPMorgan (though BofA showed an increase). We'll see later this morning what Goldman reports. Prior to earnings season, both Goldman and Morgan were thought to be especially vulnerable to a slowdown in trading revenue.
Tier 1 Common Equity Tier 1 capital ratio of 14.1%. Tangible book value per share of $27.41.
Net interest income of $1.383B fell from $1.459B one year ago, with NIM of 3.52% falling 24 basis points. The average yield on the loan portfolio of 4.58% is off 45 bps amid the runoff of higher-yielding covered loans and the sale of a consumer lending subsidiary in Q4.
Noninterest income of $911M fell from $1.001B a year ago as mortgage banking income fell $106M. Provision for credit losses fell $180M, or 72.9%. Net charge-offs fell $119M, or 43.3%. The reserve release of $80M compared to $54M one year ago.
Noninterest expense of $1.4B fell 0.8% from a year ago, mostly driven by $35M lower personnel expense; it fell by an annualized 15% from Q4 "driven by substantially lower personnel costs and professional services expenses ... We continue to expect improvement in the efficiency ratio as revenue growth is expected to outpace expense growth."
Basel III common equity Tier 1 capital ratio of 9.5% up from 9.3% at the end of 2013.
Mixed signals from the Fed were a major reason Citigroup (C) execs were so shocked the bank's capital plan was rejected by the central bank last month, reports the WSJ. The FRBNY reportedly told Ciit it had more time to fix a series of shortcomings, but Fed officials in D.C. flunked the bank because it hadn't made enough progress.
The episode is the latest in a series of communications issues surrounding the now-annual D.C. assessment of the banking industry. RBC's Gerald Cassidy sums up the feeling among many on both the buy and sell-side: "Do you always need to have somebody fail to make the test look strong and rigorous?"