A strong first quarter has propelled the US bank’s SEC-registered structured note sales to a quarterly record.

GS Finance, the issuance entity of Goldman Sachs, has closed the first quarter of 2024 with a record high traded notional at US$4.2 billion across 1,157 structured notes registered with the US Securities and Exchange Commission (SEC), according to SRP data.

The amount more than doubles year-on-year (YoY) with an increase of 13.7% higher quarter-over-quarter (QoQ) as single stocks, index baskets and commodity underliers registered growth on the bank's structured products offering. Sales surpassed the last quarterly peak at US$4.1 billion seen in Q1 2022 and accounted for 36.8% of the issuer’s total traded notional in 2023.

Despite the growth, GS remains the runner-up by traded notional behind J.P. Morgan which significantly elevated its traded volume to US$5.3 billion mainly due to two convertible notes. 

The best-selling structure at GS during the quarter was the Autocallable Fixed Coupon Index-Linked Notes - Worst of Option (40057YCJ0) which raised US$109.7m. The one-year autocallable note is linked to a worst-of basket comprising the S&P 500, Nasdaq 100 and Russell 2000. The principal-at-risk product offers a fixed monthly coupon of 8.89% pa and includes a 30% downside protection barrier.

iCapital Markets, a broker-dealer and an affiliate of GS Finance, acts as the third-party distributor and receives a fee from the primary underwriter Goldman Sachs & Co.

Compared with the previous quarter, index baskets gained traction as the volume linked to this kind of underlying doubled to US$1.1 billion, representing a quarter of the entire sales at GS Finance in Q1 2024. Single stocks were also in focus with the sales volume increasing almost by 80% to US$600m.

Single indices continued to be the bread-and-butter, accounting for 40.2% of the total sales volume, although the notional linked to this underlying type declined 16% to US$1.7 billion QoQ.

Goldman also marketed eight commodity-linked issuance worth US$55m linked to the ICE Brent Crude futures contract and West Texas Intermediate (WTI) light sweet crude oil futures contract. Digital, autocallable or enhanced trigger jumps payoff types were deployed to deliver these structures.

In addition, the Digital Linked Notes - 2Y USD ICE Swap Rate (40057XUK9) accounted for the sole issuance linked to the interest rate – the product has a one-year tenor and came just short of US$1m notional.

Beyond structured notes, Goldman Sachs Group issued 39 callable fixed rate notes with combined notional of US$383.0m in the US, a significant fall compared to the US$881.9m in the previous quarter.

In March, the Goldman Sachs (GS) Canopy Index went live and surfaced in the fixed index annuity market in the US, issued by Delaware Life Insurance Co.

Outside of its home market, the US bank listed 63 structured products in Hong Kong SAR and issued 340 structured notes with a memory feature in Taiwan during the three months. In Europe, the bank was active in France (61 products), Sweden (15), Poland (11), Ireland (10), the UK (seven) and Finland (seven) on top of 33,867 listed certificates in Germany.   

Earnings

Goldman Sachs Group, led by chairman and CEO David Solomon (pictured), reported net revenues of US$14.21 billion for Q1 2024, a 16% increase YoY reflecting higher net revenues across all segments, according to the bank’s latest earnings report.

Net earnings went up 27.8% to US$4.13 billion as operating expenses rose three percent to US$8.7 billion. Diluted earnings per common share (EPS) was $11.58 and annualized return on average common shareholders’ equity (ROE) was 14.8%.

Global banking & markets generated quarterly net revenues of US$9.73 billion, ‘driven by strong performances in investment banking fees, fixed income, currency and commodities (FICC) including record quarterly net revenues in financing and equities (including the second highest quarterly net revenues in financing)’, stated the report.

Specifically, investment banking fees were 32% higher to US$2.1 billion. Net revenues in FICC grew 10% to US$4.3 billion while net revenues in equities climbed 10% to US$3.3 billion during the quarter YoY.

Asset & Wealth Management generated quarterly net revenues of US$3.79 billion, including record quarterly Management and other fees. Assets under supervision increased by US$36 billion during the quarter to a record US$2.85 trillion.

Moreover, net revenues in platform solutions were increased 24% to US$698 million compared to the prior-year period driven by net revenues in consumer platforms.

Click the links to read the Goldman Sachs’s Q1 2024 results and presentation.

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