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Goldman Sachs reported lower profits Tuesday on a big drop in revenues tied to corporate merger advising, but the firm still topped analyst expectations on strong trading revenues.

The big New York investment bank, which unveiled details of a reorganization plan, pointed to a “significant decline in industry-wide completed mergers and acquisitions,” as well as lower revenues from debt and equity underwriting.

But that drag was offset by elevated volatility in financial markets during the period, which led to “significantly higher” revenues in interest rate products and currencies and boosted performance in commodities and credit products.

The firm also scored higher net interest income tied to the benefits of higher Federal Reserve interest rates on its lending.

Profits were $3.0 billion, down 44 percent from the 2021 period, while revenues declined 12 percent to $12.0 billion.

The results come on the heels of similar reports from other large banks that have seen earnings drop, but still exceed expectations.

Goldman increased its provisions for credit losses compared with the year-ago period, citing growth in its consumer business, charge-offs for bad loans and the impact of “continued broad concerns on the macroeconomic outlook.”

The investment bank’s chief executive, David Solomon, told CNBC early Tuesday that businesses should be “cautious” in light of increased volatility.

“That doesn’t mean for sure that we have a really difficult economic scenario,” Solomon said. “But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”

Goldman plans to streamline its businesses to three operating segments from four, one of which is “platform solutions,” which will include consumer partnerships and its GreenSky acquisition of a fintech platform for home improvement consumer loans.

Shares rose 3.2 percen to $316.60 in pre-market trading.

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Goldman Sachs’ consumer and wealth management arm believes 2022 will be a huge year for value stocks while the broader S&P 500 Index will see single-digit growth of 6.3%.

The New York-based behemoth is bullish on energy stocks and healthcare stocks. It’s also overweight commodities and financial institutions, specifically in the Eurozone. The firm remains bullish on U.S. equities and bearish on the unappealing returns of cash and bonds.

Goldman’s projected 6.3% S&P 500 return is more muted than last year's robust 26.9% and 2020’s 16.1% level, but a number of uncertainties could work against stocks this year.

Head of Tactical Asset Allocation Brett Nelson told Forbes that his firm sees an 85% chance of the S&P 500 moving higher in 2022 with the Covid-19 pandemic at the center of much of the uncertainty.

The Fed’s monetary policy is also being watched closely. Goldman Sachs anticipates at least three interest rate hikes of 25 basis points but it’s optimistic that higher valuations that have been partially justified by low rates have room to run before facing major headwinds. Looking at historical data, Nelson told reporters that if rates got up to 5%, it would pose a challenging environment with interest outpacing inflation and growth.

Goldman expects the year to end with 3.1% unemployment, lower than the current rate of 3.9%. They also foresee a sizable reduction in inflation with expectations for a 3.4% consumer price index for December 2022, a marked deflation from the 7% rate from this past December.

Nelson has seen much of his firm’s expectations of value outperforming growth play out in the first couple weeks of 2022 as technology stocks and other growth stocks struggle, and energy and other value firms outperform while the 10-year treasury has moved up rapidly over the last month.