Goldman Sachs beat earnings but disappointing trading. The stock is falling.

Despite higher earnings, Goldman Sachs’ first-quarter results appear to buck the trend for major U.S. banks. Investors can blame the underperformance from the groups’ fixed-income trading segment.

Goldman Sachs (ticker: GS ) reported first-quarter earnings of $8.78 a share on revenue of $12.22 billion. Analysts polled by FactSet had expected earnings of $8.14 a share on revenue of $12.76 billion.

Most of the mistakes came from Goldman’s trading division, which led to the decline in revenue. Unlike rival banks that have more niche consumer banking or asset management businesses, the bank relies heavily on investment banking and trading as a source of revenue.

Amid a slowdown in investment banking — a slowdown in mergers and acquisitions and initial public offerings — and turmoil in global markets amid fears about the health of banks, Goldman’s trading division should have shined. At least, that’s what was expected.

Overall, the global banking and markets division—which includes investment banking—had revenue of $8.44 billion, a touch above the $8.4 billion analysts were expecting. Investment banking fees of $1.58 billion, a 34% slowdown from a year ago, were ahead of an estimated $1.44 billion.

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But amid turmoil in bond markets in the first quarter, fixed-income trading generated $3.93 billion—far short of the $4.16 billion analysts had expected.

Net interest income—a key measure of profitability that measures the difference between interest earned on loans and interest paid on deposits—also disappointed, coming in at $1.78 billion, below analysts’ expectations of $2.11 billion.

Shares of Goldman Sachs fell 3.7% in the US premarket after an early release on Tuesday, before Bank of America ( BAC ) traded 1.9% higher after reporting strong earnings.

This is breaking news. Read the Goldman Sachs earnings preview below and stay tuned for more analysis soon.

Goldman Sachs and other major U.S. banks opened the first-quarter earnings season a month after shaking markets that rocked the health of the sector, bringing results into a brighter-than-usual light.

Goldman Sachs (ticker: GS ) results are expected before the opening bell on Tuesday. The bank is expected to report earnings of $8.14 a share on revenue of $12.76 billion, based on estimates from analysts surveyed by FactSet.

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Net interest income—a key measure of profitability that measures the difference between interest earned on loans and deposits—is expected to rise from $2.07 billion to $2.11 billion by the end of 2022. Meanwhile, revenues in the investment banking business are declining. That was $1.44 billion, up from $1.87 billion in the fourth quarter last year—a sign that the deal may have slowed amid last month’s turmoil.

The March panic on banks was largely confined to regional groups, on the back of the collapse of three US lenders, including Silicon Valley Bank, the biggest failure since the 2008-09 financial crisis. Still, Goldman and its peers on Wall Street will still scrutinize the results for what they say about the sector’s dynamics and the health of the broader U.S. economy, complicated by investors.

Goldman is in good company, along with Bank of America ( PAC ) and Morgan Stanley ( MS ) due to report results on Wednesday. JPMorgan Chase ( JPM ), Citigroup ( C ), and Wells Fargo ( WFC ) got the ball rolling with earnings last Friday—impressing analysts and revealing that problems at smaller banks are contained.

One aspect of Goldman’s results to watch for is that the bank, like peers including JPMorgan, saw deposit inflows in March as customers moved money from smaller banks to Wall Street giants.

Amid concerns about how a rapid increase in interest rates will affect the real economy, attention will also be focused on how much money Goldman is setting aside for loan loss provisions. Any outlook for the bank will get investors’ attention and guidance touching on the possibility of a credit crunch.

Write to Jack Denton at [email protected]

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