Goldman Sachs reported lower profits Tuesday on a big drop in revenues tied to corporate merger advising, but the firm still topped analyst expectations on strong trading revenues.
The big New York investment bank, which unveiled details of a reorganization plan, pointed to a "significant decline in industry-wide completed mergers and acquisitions," as well as lower revenues from debt and equity underwriting.
But that drag was offset by elevated volatility in financial markets during the period, which led to "significantly higher" revenues in interest rate products and currencies and boosted performance in commodities and credit products.
The firm also scored higher net interest income tied to the benefits of higher Federal Reserve interest rates on its lending.
Profits were $3.0 billion, down 44 percent from the 2021 period, while revenues declined 12 percent to $12.0 billion.
The results come on the heels of similar reports from other large banks that have seen earnings drop, but still exceed expectations.
Goldman increased its provisions for credit losses compared with the year-ago period, citing growth in its consumer business, charge-offs for bad loans and the impact of "continued broad concerns on the macroeconomic outlook."
The investment bank's chief executive, David Solomon, told CNBC early Tuesday that businesses should be "cautious" in light of increased volatility.
"That doesn't mean for sure that we have a really difficult economic scenario," Solomon said. "But on the distribution of outcomes, there's a good chance that we have a recession in the United States."
Goldman plans to streamline its businesses to three operating segments from four, one of which is "platform solutions," which will include consumer partnerships and its GreenSky acquisition of a fintech platform for home improvement consumer loans.
Shares rose 3.2 percen to $316.60 in pre-market trading.