The first-quarter earnings season continues and Goldman Sachs has published the results of the first quarter. Unlike most other large banks, which see no profit from the massive increase in losses, Goldman's business is doing quite well. Goldman's profit of $3.11 per share for the quarter fell by about 55% year on year. It is worth noting, however, that the decline in the bank's profitability was quite mild compared to some of its competitors - Goldman's net profit dropped 46% YoY, while JPMorgan Chase and Wells Fargo's net profit dropped 69% and 89%, respectively.  Revenue is another issue. Goldman's revenue for the first quarter amounted to $8.74 billion, which is much more than analysts estimated and decreased by less than 1% compared to the first quarter of last year.

Of course, the revenue figures never tell the whole story. And this is especially true in the current environment - some aspects of the banking industry are suffering, while others are actually in better condition than before the market downturn.  The asset management segment of the bank had negative quarterly revenues, which is a serious decline from $1.79 billion in the first quarter of 2019. Losses on investments in debt and equity were the main reasons for unsatisfactory performance. Goldman Sachs' reserve for credit losses increased by USD 713 million, compared to USD 1.79 billion in the first quarter of 2019. The reserve for credit losses increased by USD 713 million compared to the first quarter of 2019 in anticipation of credit losses, particularly on corporate loans related to the energy sector and other enterprises affected by COVID-19.

While the COVID-19 pandemic will undoubtedly harm some of Goldman Sach's business areas, it is important to know that some key business areas are functioning reasonably well in the context of the healthcare crisis. Goldman's investment banking business generated revenues of $2.18 billion, the second-largest quarterly revenue in the company's history and 25% higher than in the same quarter last year. Besides, the bank maintained its position number one in the global M&A market. Trading revenue was a very strong part of the quarter, which is the main reason why Goldman Sach's revenue was so strong. Revenue from fixed income, currency and commodities trading (FICC) was the highest in five years and earnings from equity trading were also strong. Two aspects of the trading business generated revenues of $2.97 billion and $2.19 billion, respectively, which together accounted for about $1.2 billion more than analysts expected. This is that when markets become volatile, it leads to higher trading activity, which is a positive catalyst for trading income. Since trading is the largest part of Goldman's income, it can help the bank maintain profitability better than its competitors in turbulent times. Finally, Goldman's revenues from customer transactions, perhaps the most promising long-term growth driver in the bank's business, grew 39% year on year. Deposits on Marcus platform and increased credit card balances (Goldman Sach launched the Apple Card last year) helped spur growth. However, it is important to note that consumer banking accounts for just over 3% of Goldman's revenue.

In conclusion, remember that the whole first quarter was not affected by the coronavirus outbreak. For the most part, January and February were relatively "normal" months in the US economy. Second-quarter figures are likely to be more reflective of the impact of the pandemic, especially in terms of actual loan losses and the full effect of volatility on trade earnings.

In any case, until there is greater clarity about when the economy may return to normal, stock market volatility (and banking equities in particular) is unlikely to disappear, whatever the first quarter's results say.