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Fruitas Holdings net income rises 37% to P113 million

LISTED food and beverage kiosk operator Fruitas Holdings, Inc. recorded a 37% increase in its consolidated net income to P113 million in 2023 from P82 million in 2022, led by higher revenues across its subsidiaries.

The company’s revenues rose by 37% to P2.47 billion in 2023 from P1.8 billion in 2022, Fruitas Holdings said in a stock exchange disclosure on Tuesday.

Fruitas attributed the higher revenues to the same-store sales growth and expansion of its e-commerce business.

“Revenue growth was broad-based across our subsidiaries, led by Balai ni Fruitas and Fruitasgroup. Balai ni Fruitas is anchored by Balai Pandesal, while Fruitasgroup houses our beverage brands. We also completed the acquisition of Ling Nam in March 2023, which significantly contributed to our revenue growth and profitability,” it said.

Fruitas saw a 42% increase in its gross profit to P1.49 billion from P1.05 billion in 2022. Gross profit margin also rose to 60.5% from 58.5% in 2022.

Fruitas has 817 stores as of end-2023, up by 44 from the 773 stores recorded as of end-2022.

The company’s brands include Fruitas Fresh from Babot’s Farm, Buko Loco, Balai Pandesal, Buko ni Fruitas, De Original Jamaican Pattie, Johnn Lemon, Juice Avenue, Black Pearl, Friends Fries, Sabroso Lechon, Ling Nam, and Fly Kitchen.

On Tuesday, Fruitas Holdings shares dropped by 1.28% or one centavo to 77 centavos. — Revin Mikhael D. Ochave

Friends, partners, and the values we all share

NOORULABDEEN AHMAD-UNSPLASH

The much-awaited trilateral summit among the Philippines, United States, and Japan finally took place last Thursday, April 11, at the White House in Washington DC. The top-level meeting could not have happened at a better time — just when the Philippines is facing increasing aggression from China in the West Philippine Sea.

On the day before the summit, President Ferdinand Marcos, Jr. and United States President Joseph Biden met and agreed to strengthen their security and economic partnership. During the one-on-one, President Biden reaffirmed the ironclad commitment of the US to the defense of the Philippines, as embodied in the Mutual Defense Treaty of 1951.

Moreover, Mr. Biden requested the incorporation of an additional $128 million for infrastructure projects in the nine sites of the Enhanced Defense Cooperation Agreement for fiscal year 2025. Five sites were originally designated in 2016, but four more were added last year. The additional funding will enable the sites to become hubs for humanitarian assistance, disaster relief, and other crisis responses.

During the summit proper, the three leaders issued a joint statement that it was a gathering of equal partners united by the vision of a free and open Indo-Pacific and a rules-based international order. Together with Japanese Prime Minister Fumio Kishida, Mssrs. Biden and Marcos expressed serious concerns on the increasingly aggressive behavior of China in the West Philippine Sea.

Japan and the US reiterated their support for the Philippines’ 2016 victory before the Permanent Court of Arbitration. Security and stability in the West Philippine Sea, they said, has direct effects on the economic security of the Indo-Pacific region.

Meanwhile, China has continued to dismiss the arbitral body’s decision and its jurisdiction over it, even as it is a party to the United Nations Convention on the Law of the Sea (UNCLOS). It has also used different tactics in justifying its acts in the West Philippine Sea, twisting the Philippines’ legal victory and the basis for such, even modifying its claim of a nine-dash line into a 10-dash line.

During the summit, President Marcos Jr. called the United States and Japan our friends and partners.

On the following day, the US and the Philippines held an inaugural 3+3 meeting, consisting of the top State/Foreign Affairs, Defense, and National Security officials of the two countries. US Secretary of State Antony J. Blinken, Secretary of Defense Lloyd J. Austin III, and National Security Advisor Jake Sullivan, Philippine Secretary of Foreign Affairs Enrique Manalo, Secretary of National Defense Gilberto Teodoro, and National Security Advisor Eduardo M. Año discussed the situation in the South China Sea and underscored the interest to increase support for the modernization of the Philippines’ armed forces.

WHAT DOES IT MEAN?
In these perilous times, complicated by the situation in the Middle East, what does such a summit mean for the Philippines and for its people?

First, we have the US’ and Japan’s word. There have been countless instances where these like-minded nations and their leaders have expressed their commitment to the rules-based order. But now that there is an actual case of threat and doublespeak from China, which is even claiming to abide by the law, it is reassuring to think that the lofty principles we speak of will be put into practice. We are, indeed, in good company.

Of course, we will not stop at mere pronouncements and reiteration. Concrete actions such as increased assistance or joint activities are all tangible manifestations of our friends’ commitment.

This is not about any single player, or the supremacy of one power or two or several. Rather, what we are asserting is the supremacy of the rules-based international order that every nation, big or small, commits to uphold.

The Philippines is proud to belong to the community of nations that recognizes the supremacy of international law and lives by the values that ensure balance, security, respect, and prosperity. This community will certainly not tolerate any attempt to upset the order.

Citizens of all nations have the right to security, to sleep soundly at night, trusting that their way of life would not be disrupted or that they would wake up to find their territory usurped by another country.

Economic security is just as important, because without the assurance that they would have enough to eat or have all their basic needs covered, people will also not feel safe enough to go about their daily existence. Thus, support in the form of investments from other countries will go a long way in generating a virtuous cycle that upgrades infrastructure, empowers people, improves their quality of life, and gives them dignity.

Finally, while there are numerous multifaceted threats, traditional, nontraditional, and emerging, that confront the Indo-Pacific region, the more important thing is that there are also numerous avenues for cooperation to address and meet these threats head-on.

The just-concluded trilateral summit gives us reason to be optimistic, albeit with caution. We are always grateful for our friends and partners.

 

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.

PBCom posts 16.3% increase in net earnings

PHILIPPINE Bank of Communications (PBCom) saw its attributable net income rise by 16.3% in 2023, it said on Tuesday.

The lender’s attributable net income stood at P1.898 billion last year, up from P1.632 billion in 2022, the bank’s financial statement disclosed to the local bourse showed.

This translated to a return on average equity of 11.42% and a return on average assets of 1.39%.

PBCom’s net interest income went down by 2.25% year on year to P4.7 billion from P4.81 billion amid higher interest expenses due to an elevated rate environment.

As a result, PBCom’s net interest margin declined to 3.96% from 4.8%.

Total operating income grew by 7.21% to P5.96 billion from P5.56 billion on higher earnings from services charges, fees and commissions and better trading and foreign exchange gains, among others.

Meanwhile, the bank’s operating expenses inched up by 0.54% to P3.42 billion last year from P3.41 billion in 2022.

This brought its cost-to-income ratio to 57.82%, higher than the 56.05% in 2022.

PBCom’s loans grew by 19.31% to P91.77 billion in 2023 from P76.92 billion a year prior.

The bank ended the year with a nonperforming loan ratio of 2.4%, lower than the 3.23% seen in the previous year.

On the funding side, deposit liabilities stood at P116.7 billion, up by 17.59% from P99.44 billion in 2022. PBCom said this was mainly driven by time deposits.

The bank’s loan-to-deposit ratio went up to 78.74% from 77.88%.

PBCom’s assets stood at P147.48 billion at end-2023, up by 18.1% from P124.88 billion a year ago. Total equity rose by 13.42% to P17.66 billion from P15.57 billion.

The bank’s capital adequacy ratio stood at 16.55% last year, down from 17.07% in 2022. Its liquidity ratio also went down to 19.69% from 21.41%.

PBCom’s shares declined by 42 centavos or 2.35% to end at P17.46 apiece on Tuesday. — A.M.C. Sy

PetroEnergy income down 6% to P515 million

PETROENERGY Resources Corp. (PERC) saw a decline of 5.99% in its attributable net income to P515.65 million for 2023, the energy company said on Tuesday.

The company’s gross revenues rose by 22.3% to P3.35 billion from P2.74 billion in 2022, PERC said in its regulatory filing.

PERC reported a 9% increase in its consolidated net income to P944 million for 2023 from P863 million a year ago due to higher electricity sales.

“The increase in Consolidated Net Income is attributable to the higher electricity sales of its RE projects and higher interest income generated by the proceeds from Kyuden International Corporation’s 25% equity investment in PGEC,” the company said in a statement.

Consolidated assets during the period increased by 30% to P21.9 billion due to the acquisition from EEI Power Corp. of 20% direct equity interest in PetroWind Energy, Inc., a 44% direct equity interest in PetroSolar Corp., and an additional 7.5% equity interest in PetroGreen Energy Corp., the company said.

It said that the acquisitions have been funded through term loans from local banks.

“Another reason for the increases is the start of the funding and construction of PWEI’s 13.2 MW (megawatts) Phase 2 of the Nabas Wind Power Project in Aklan (6.6 MW is now under testing and commissioning),” PERC said.

Electricity sales rose largely due to the full-year operation of the 32 MW Maibarara Geothermal Power Project Units 1 and 2 compared to 2022 when scheduled major plant preventive maintenance activities was conducted for close to one month.

Meanwhile, Basic Energy Corp. reported a 54.9% decrease in its attributable net income to P42.69 million for 2023 from P94.63 million the previous year.

In a stock exchange disclosure, the energy company said that its gross revenues declined by 14.2% to P64.07 million from P74.64 million in the previous year. — Sheldeen Joy Talavera

Filipino portal capitalizes on online gaming gap

By Patricia B. Mirasol, Multimedia Producer

BRYLLE CESARE J. UYTIEPO, 25, had no intention of monetizing Axies Alerts PH, a project he started in June 2021 to share updates on the play-to-earn game Axie Infinity.

“I am a gamer at heart,” Mr. Uytiepo said in a Zoom interview. “My family was playing Axie [at the height of the pandemic] when we thought: ‘How come no one is updating people on the Axie servers being down?’”

He opened a Facebook page for family and friends to address the information gap, and the page had 500,000 followers in just four months.

The news alert portal drummed up enough attention to get sponsorships from companies like PDAX, a cryptocurrency exchange, after four months in operation.

Web 3.0 startup Yield Guild Games bought a 51% stake in Axies Alerts — now known as YGG Alerts — in January 2022, and the rest of the company a year later.

Yield Guild Games has a market capitalization of $151 million and was ranked No. 257 on the CoinMarketCap website.

Today, YGG Alerts shares news on cryptocurrencies, nonfungible tokens — digital representations of real-life objects like art — and other related technologies to its more than 1 million followers on social media.

The Philippines was No. 6 in the 2023 Crypto Adoption Report of analysis firm Chainalysis, four spots down from its 2022 ranking.

Mr. Uytiepo said YGG Philippines and Axies Alerts collaborated in 2021 to help in disaster response for Typhoon Odette. He met Luis Buenaventura, country head of YGG Philippines, and said: “Our goals are aligned, so why not just work together?’”

Mr. Uytiepo now serves as the creative lead of YGG Alerts. His Axies Alerts co-founders James Patrick Pebenito and June Philip “Phee” Tejada, have also been absorbed by the organization as account manager and people and business development lead, respectively.

Axies Alerts was initially met with skepticism when it started, said Mr. Uytiepo, an Italian cuisine-trained chef who graduated from culinary school in 2019.

Mr. Uytiepo turned down job offers after graduation so he could open a restaurant, only to shelve his plan and turn to gaming when the COVID-19 pandemic struck.

Axie Infinity, which combines entertainment with financial speculation, drew about 2.7 million active daily users at its peak, according to Cryptogambling.tv. Half of the game’s players came from the Philippines.

These gave rise to gaming guilds — communities of players who help one another within and outside a specific game.

“We had to earn the trust of our community,” Mr. Uytiepo told BusinessWorld. “In our space, we have a lot of bad actors and exploiters.”

“We don’t just advertise about cryptocurrencies,” he added. “We take the time to research before we post.”

Technologies such as blockchain and cryptocurrency can make life easier “but with proper regulations,” Mr. Uytiepo said.

“Having good regulation for this industry is essential,” he said. “I believe in balanced regulation so the space can grow.”

Singapore is facing a dangerous world without Lee

MARK STOOP-UNSPLASH

SINGAPORE Prime Minister Lee Hsien Loong’s decision to step down after 19 years and hand power to deputy Lawrence Wong on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November 2025.

Wong — who is currently both deputy prime minister and minister of finance — will need a combination of fresh ideas, wisdom, and experience as he writes the island’s next chapter. The world that confronts it is far more precarious than at any other time in the nation’s history, except for the upheaval caused by Singapore’s decision to break away from Malaysia in 1965.

The global landscape was then, as it is today, dangerous and uncertain. The Cold War between the US and the Soviet Union was at its peak. A nuclear missile crisis was just barely averted and much of what we call the Global South today had just emerged from the ugly grip of colonialism. Singapore, a tiny dot at the bottom of the Malayan peninsula, with no natural resources and a largely illiterate and unskilled workforce, was about to find out what it meant to strike out alone as an independent nation, without the benefit of a vast hinterland.

The first prime minister and founding father, Lee Kuan Yew, famously cried on national television when he made the announcement of the island’s separation from its neighbor, because of the difficult path he knew lay ahead. Such tears are unlikely this time around, but the small nation is entering uncharted waters yet again and Wong’s ability to navigate will be a key gauge of his leadership.

The new prime minister will have to deal with an increasingly acrimonious relationship between the US and China. Singapore has consistently said it wants to be friends with all and enemies of none, and this has helped the city-state go from a developing economy to Asia’s richest country. It has benefited from decades of globalization, a world where borders were erased and goods and services flowed freely, lifting incomes and stock market valuations.

As Beijing has cracked down on pro-democracy activists in Hong Kong and imposed harsh security laws, foreign companies and talent have sought haven in Singapore. The city-state will need to manage relations between Washington and Beijing delicately, even as it seeks to calm tensions and soothe nerves on both sides.

That won’t be easy. The handover comes at a time when the US’ legitimacy has taken a hit in the Global South over the Biden administration’s handling of the Israel-Hamas conflict. It has become a key focal point, not just for Asia’s Muslims in places like Indonesia and Malaysia, where the majority of citizens follow Islam, but also for citizens in Singapore who sympathize with Palestinians and have condemned the human suffering. A recent survey conducted by the ASEAN Studies Centre at ISEAS – Yusof Ishak Institute in Singapore, showed that more than half of the Southeast Asians asked would now prefer to align with China over the US if forced to choose between the rivals, reversing last year’s trends.

So as Wong steps up to the seat of power, it is best he gets all the help he can. Singapore’s leadership succession is a carefully telegraphed event that’s been years in the making. Even though the 51-year-old is known to be sincere and hardworking, that won’t be enough to get him out of tricky diplomatic tussles. A clear political vision is missing, says Ian Chong, non-resident scholar at Carnegie China and a political scientist at the National University of Singapore. “We know the hobbies of the new prime minister, but we don’t know what he has planned for the country,” he told me. “It’s a bit strange that the person taking over, and has had ample time to lay out a path, has yet to do so. Perhaps what that tells is you that no one in the government knows yet.” Wong’s guitar skills have made him a favorite on social media, but are unlikely to come in that handy as he takes on the top job.

It is not clear yet whether Lee, like his father before him, will serve as a minister mentor in Wong’s cabinet. It would certainly be useful to have his knowledge and expertise, as well as the relationships he has built as a global statesman of more than two decades. But the new prime minister should also be ready to listen to fresh ideas, not just from his own overwhelmingly dominant People’s Action Party, but also from the opposition, including leaders like lawyer and author Pritam Singh, who have proposed novel ways to address pressing domestic issues like the income gap, as well as gender disparities in the workplace.

These are not insurmountable challenges, but they require a deftness in managing both foreign policy and the domestic agenda. Singapore has always managed to stand out as the little country that could. The new leader has big shoes to fill.

BLOOMBERG OPINION

BSP looking into BPI downtime

REUTERS

THE BANGKO Sentral ng Pilipinas (BSP) is looking into the unscheduled service disruption experienced by clients of Bank of the Philippine Islands (BPI) on Tuesday, a senior official said.

“At this point, the BSP is looking at the root cause of this occurrence,” BSP Deputy Governor Chuchi G. Fonacier said in a Viber message on Tuesday.

BPI’s services were unavailable early on Tuesday as its system was unable to process an “unusually high” volume of transactions, it said in an advisory.

“Please be advised that ATM (automated teller machine) withdrawals, CAM (cash acceptance machine) deposits, Debit Card purchases, BPI app, BPI online, and use of BPI online credentials for payments and loading using third party apps are currently not available,” it said on Tuesday morning. “Our system is still processing the unusually high weekend transactions due to tax payments.”

BPI was able to restore the affected services as of 2:40 p.m. on Tuesday. It had hoped to resolve the issue by 12 p.m. that day, but the bank said in another advisory that processing the affected transactions took longer than expected.

The listed bank’s attributable net income rose by 61.13% year on year to P54.82 billion in 2023.

BPI’s shares went down by P1.50 or 1.28% to close at P115.50 apiece on Tuesday. — Aaron Michael C. Sy

Russia adds director and playwright to ‘terrorists and extremists’ list

EVGENIA BERKOVICH — WIKIPEDIA

LONDON — Russian theater director Zhenya Berkovich and playwright Svetlana Petriychuk have been added to an official list of “terrorists and extremists” as they await trial on charges of “justifying terrorism.”

The pair were arrested in May last year. The charges against them relate to an award-winning play about Russian women who married Islamic State fighters.

The “terrorists and extremists” register is published online and run by Rosfinmonitoring, a state agency which is empowered to freeze the assets of people and entities on the list — even if they have yet to be convicted of a crime.

Ms. Berkovich, 38, and Ms. Petriychuk, 43, are among many thousands of people and entities who have been similarly designated in a crackdown on perceived subversive activity that intensified after Russia launched its full-scale invasion of Ukraine in 2022.

The Kremlin does not comment on individual cases but says Russia is engaged in an existential struggle with the West and needs to robustly uphold its laws and defend itself.

The play Finist the Bright Falcon was written by Ms. Petriychuk and premiered in 2020 under Ms. Berkovich’s direction. The case arising from it has become a focus for fellow artists, human rights defenders and free speech campaigners.

In a court appearance in January, Ms. Berkovich addressed the judge in verse, satirizing the repetitive and slow-moving pace of proceedings and describing the pain that she and her family were going through.

In the speech, a version of which was later released by Russian artists in a rap-style YouTube video with music and graphics — Ms. Berkovich said, in part:

“I’m in Russia, under investigation’s net/Nowhere to escape, nothing to gain./I still have two sick kids, don’t forget,/Whose childhoods are stolen, once again.” — Reuters

Robinsons Retail Holdings notifies shareholders of virtual annual meeting on May 10

 

 

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Rust armorer sentenced to 18 months in fatal shooting by Alec Baldwin

ALEC BALDWIN in a scene from Rust.

SANTA FE, New Mexico — Hannah Gutierrez, the chief weapons handler for the Western movie Rust, was sentenced to 18 months in prison on Monday in the death of cinematographer Halyna Hutchins, who was shot when actor Alec Baldwin was handling a gun during the film’s production in 2021. In March, Ms. Gutierrez, 27, was found guilty of involuntary manslaughter for mistakenly loading a live round into a revolver Mr. Baldwin was using on a Santa Fe, New Mexico, movie set.

“You alone turned a safe weapon into a lethal weapon,” Judge Mary Marlowe Sommer told Ms. Gutierrez as she handed down the sentence.

In video calls and the courtroom during the hearing, Hutchins’ friends from the film industry paid tribute to her creativity and kindness. They also lambasted Ms. Gutierrez’s breaches in firearms safety protocol.

“I struggle to deal with this repeatedly being called an accident, because it was not an accident, it was negligence,” said Jen White, a film industry colleague.

The shooting, which stunned Hollywood, is believed to be the first time in modern times that a member of a film crew or cast was killed by a live round accidentally loaded into a gun. Mr. Baldwin’s trial is set for July 10 after a grand jury indicted him on a charge of involuntary manslaughter in January. Ms. Gutierrez’s lawyer Jason Bowles had requested she be given probation, but prosecutors argued for a full 18 months due to lack of contrition.

“I beg you please don’t give me more time,” Ms. Gutierrez told the court, adding that her “heart ached” for Ms. Hutchins’ family. “The jury has found me at fault for this tragedy but that doesn’t make me a monster, that makes me human.”

In a video call from Kiev the Ukraine-born cinematographer’s mother mourned her daughter’s death and her young grandson Andros being left without a mother.

“It’s the hardest thing to lose a child,” said Olga Solovey, whose comments were translated into English in subtitles.

Prosecutor Kari Morrissey pointed to phone calls by Gutierrez from jail in which she said the jurors were “idiots,” the judge had been “paid off,” and she continued to blame Baldwin and others for the shooting.

Gutierrez had already spent a month in Santa Fe county jail following her conviction.

THREE-WEEK TRIAL

On March 6, a Santa Fe jury took less than two hours to find her guilty. One juror afterwards said Ms. Gutierrez had not done her job to ensure weapons safety on set.

Ms. Hutchins’ death initially prompted US film and television productions to stop using real firearms and blank ammunition. Two and a half years later, many are using them again because of the realistic effects they produce, according to armorers.

Ms. Hutchins was fatally shot when Mr. Baldwin pointed his gun at the cinematographer and cocked the weapon as she set up a scene.

During Ms. Gutierrez’s three-week trial, prosecutors accused her of unknowingly bringing live Colt .45 rounds onto the set of the low-budget movie, something that has been strictly forbidden for nearly a century under Screen Actors Guild safety guidelines. Mr. Bowles said Ms. Gutierrez was the scapegoat for a chaotic production where she was not given time to check weapons. He blamed Ms. Hutchins’ death on reckless use of firearms by Mr. Baldwin and his efforts to rush and control the filming. Mr. Baldwin was also a producer and writer on the movie.

Attorney Gloria Allred, representing Ms. Hutchins’ parents and sister in a lawsuit against Mr. Baldwin, said she supported his criminal prosecution.

“Mr. Baldwin has done everything he could to try to dismiss the case but at this point it appears that trial is going forward,” Ms. Allred told reporters outside the courthouse.

The 30 Rock actor denies pulling the trigger and said he had been directed to aim it at the camera. But the FBI and an independent firearms expert found the gun would not fire without the trigger depressed.

Film historians such as Alan Rode have look to back to the early part of the last century to find examples of Hollywood cast or crew killed by live rounds accidentally loaded into guns.

Previous on-set fatal shootings of actors Brandon Lee in 1993 and Jon-Erik Hexum in 1984 involved blank rounds. — Reuters

Eastern Communications sets P1.15-B capex for 2024

By Revin Mikhael D. Ochave, Reporter

TELECOMMUNICATIONS PROVIDER Eastern Communications earmarked P1.15 billion for its capital expenditure (capex) budget this year to support the company’s growth plans.

Eastern Communications Assistant Vice-President Delfin Lopez said during a briefing in Makati City on Tuesday that the capex will be used to strengthen the company’s nationwide network and to expand its enterprise product offerings. The company allotted P1.04 billion as capex budget last year.

“Part of the plan is to really continue the modernization. We have this technology refresh in order for us to ensure that the network is stable and bringing the reliability and bringing the service to the customers,” Mr. Lopez said.

“Technology refresh refers to replacing some obsolete components of the network. Diversity pertains to giving resiliency to segments where we are exposed or in order for us to achieve almost a zero outage,” he added.

The telco provider is looking at Iloilo, Davao, Bohol, Boracay, Cagayan de Oro, Bacolod, and Dumaguete as areas for possible sites and business hubs.

In 2023, Eastern Communications increased its fiber network to over 9,760 kilometers with a total of 180 nodes in 42 business cities nationwide.

“These developments are driven by the company’s commitment to national connectivity, economic growth, and digital inclusion. Eastern Communications anticipates its expanded presence to catalyze economic development, improve access to essential services, and empower local businesses in its target regions,” Eastern Communications Co-Coordinator Aileen Regio said.

Meanwhile, Eastern Communications Co-Coordinator Vince Tempongko is optimistic that the company’s expansion will drive significant growth in market share, revenue, and client base.

“With the recent expansion of service areas and the diversification of our product portfolio, we’re optimistic about our current position. We foresee additional growth opportunities as we continue to expand in the future,” he said.

Eastern Communications offers custom solutions from an extensive portfolio of services that include connectivity solutions, network solutions, security solutions, cloud and data center solutions, and business applications.

Goldman Sachs Q1 profit beats market estimates

REUTERS

NEW YORK — Goldman Sachs’ profit beat Wall Street estimates, fueled by a recovery in underwriting, deals and bond trading in the first quarter that lifted its earnings per share to the highest since late 2021.

The bank’s shares rose more than 3% on Monday after it reported a strong comeback in investment banking — its traditional mainstay — after a slowdown over the last two years.

Rivals JPMorgan Chase and Citigroup cited improving conditions for dealmaking on Friday when they reported profits that beat market expectations. But their executives also cautioned about risks to the economic outlook, including the uncertain path of US interest rates.

Goldman’s profit rose 28% to $4.13 billion, or $11.58 per share, in the first quarter. That was higher than the $8.56 earnings per share (EPS) that analysts expected.

It is the highest EPS since the third quarter of 2021, according to LSEG, and beat market estimates for a slight decline.

The bank’s stock has climbed more than 4% this year, compared with an almost 7% drop for rival Morgan Stanley.

“We’re in the early stages of a reopening of capital markets,” CEO David Solomon told investors on a conference call, citing rising risk appetite among investors for initial public offerings and solid debt underwriting activity. “We continue to be constructive on the health of the US economy.”

Oppenheimer analyst Chris Kotowski wrote in a report that the earnings were a “near-perfect print,” with most profit drivers performing better than expected.

The results could relieve pressure on Mr. Solomon after a foray into consumer banking lost billions, drawing rancor and prompting senior departures. 

“A rebound in a variety of capital market sensitive revenue areas may finally be underway, while an exit from the ill-fated entry into consumer businesses has removed some headline risk,” said Stephen Biggar, a banking analyst at Argus Research.

As a leading adviser for mergers and acquisitions, Goldman handled some of last year’s biggest deals, including Exxon Mobil’s $60 billion purchase of Pioneer Natural Resources.

Deals activity could also increase as private equity firms get more involved, Solomon said.

“The LP (limited partner) community is putting a lot of pressure on the financial sponsor community to return more capital,” Mr. Solomon said. “And so I do think the pace is going to pick up,” he said.

ARTIFICIAL INTELLIGENCE
Goldman Sachs is advising clients on artificial intelligence, including potential commercial applications, regulation and impact on jobs.

“There will be significant demand for AI-related infrastructure and as a result, financing, which will be a tailwind to our business,” he said. “Like with any emerging technology, a thoughtful approach and keen eye on risk management will be crucial.”

The success of OpenAI’s ChatGPT has energized investors, who have been pouring money into promising AI startups.

The Federal Reserve has so far managed to steer the economy toward a so-called soft landing, in which it raises interest rates and tames inflation while avoiding a major downturn.

As corporations regain some confidence to raise money in capital markets, equity and bond underwriting have rebounded. Improving conditions have also spurred companies to strike more deals.

Goldman’s investment banking fees climbed 32% to $2.08 billion, propelled by higher fees from underwriting debt and stock offerings, as well as advising on mergers.

Revenue from trading in fixed income, currencies and commodities (FICC) rose 10% to $4.32 billion, helped by record financing revenue in mortgages and structured lending.

Equities revenue jumped 10% to $3.31 billion.

The asset and wealth management division generated record quarterly management fees of $2.45 billion. Meanwhile, assets under supervision rose to a record $2.85 trillion, with wealth client assets reaching $1.5 trillion. The two businesses were joined as part of a reorganization in 2022.

Platform Solutions, the unit that houses some of Goldman’s consumer operations, garnered 24% higher revenue. The bank expects the unit to be profitable in 2025 and continues to slim down the consumer operations.

“We are witnessing tangible strides by the company as it continues to transition away from the consumer banking segment allowing it to focus on the traditional side of the business,” said David Wagner, a portfolio manager at Aptus Capital Advisors LLC, which owns Goldman’s stock.

“Investors want to see what the clearer picture would be from the company and this report is hopefully just the beginning.”

Solomon, who once championed the retail push, has been criticized for the strategy.

Earlier this month, top proxy adviser Institutional Shareholder Services (ISS) urged shareholders to vote for the bank to split its chairman and CEO roles, both of which are held by Solomon. ISS cited his “missteps and steep losses.”

Goldman has also scrapped its co-branded credit cards with General Motors, and a similar partnership it has with tech giant Apple is facing an uncertain future.

The bank’s provisions for credit losses jumped to $318 million compared to a net benefit of $171 million a year ago. The increase was tied to its credit cards and wholesale loan portfolio.

Goldman had a headcount of 44,400 at the end of March, 2% lower than the fourth quarter. It had laid off thousands of employees in 2023, including a January round of cuts that was its largest since the 2008 financial crisis. — Reuters

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