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Goldman Sachs Group Inc GS-N reported a 43 per cent drop in profit but beat Wall Street expectations on Friday, as strong performances in its wealth management and trading businesses partly offset a slump in equity underwriting as stock market listings dried up.

Wall Street banks have come under pressure amid a slump in dealmaking globally, but volatility fuelled by concerns around interest rate hikes and the economic fallout of the Ukraine war helped Goldman’s trading desks smash expectations.

The bank’s global markets segment reported net revenue of $7.87-billion, a 4 per cent jump from last year when accommodative monetary policy from the U.S. Federal Reserve led to bumper levels of trading activity. The robust performance was driven by a 21 per cent rise in fixed income revenue, the bank said.

The Wall Street bank has also been taking measures under Chief Executive David Solomon to diversify its revenue stream and earn more from predictable sources like consumer banking, wealth and asset management.

Consumer and wealth management recorded a 21 per cent jump in net revenues to $2.10-billion, helped by higher management fees and credit card balances.

Investment banking revenue, however, dropped 36 per cent to $2.41-billion, as fees from advising on stock market listings and debt underwriting declined against the backdrop of heightened tensions between Russia and Ukraine.

“It was a turbulent quarter dominated by the devastating invasion of Ukraine,” Solomon said. Goldman was the first major U.S. bank to retreat from Russia.

“The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill,” Solomon added.

Goldman’s revenue from advising on deal remained largely unchanged at $1.13-billion, in sharp contrast to rival Morgan Stanley, whose revenue from the business doubled.

With the U.S. Federal Reserve beginning to wean the economy off pandemic-era support, dealmaking slowed in the quarter and cast a pall over some of Goldman’s most lucrative businesses.

Goldman also cut operating expenses by 18 per cent in the quarter, chiefly due to lower spending on compensation and benefits.

The bank posted profit applicable to common shareholders of $3.83-billion, or $10.76 per share, in the first quarter. Analysts had expected $8.89 per share, according to Refinitiv data.

Total net revenue fell to $12.93-billion in the quarter, down nearly 27 per cent from last year.

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