Goldman's Results Beat Estimates -- Update

By Peter Rudegeair 

Goldman Sachs Group Inc. said Thursday that its first-quarter profit climbed 40% as the investment bank managed through a volatile market environment.

Shares edged up 1.1% to $203.25 premarket as results easily beat Wall Street estimates.

The New York-based bank reported a profit of $2.84 billion, or $5.94 a share. That compares with $2.03 billion, or $4.02 a share, in the same period of 2014. Analysts polled by Thomson Reuters had expected earnings of $4.26 a share.

Revenue rose 14% to $10.62 billion, the highest result in four years. Analysts had expected $9.35 billion.

Higher capital requirements, increased regulatory scrutiny, and low levels of client demand have prompted many big banks to pull back from various parts of the trading business, but Goldman has held steady.

"In the long run, when things are good, everybody's going to be there. When things are bad, you're going to wish you had a relationship with the people who are committed," Blankfein previously told The Wall Street Journal.

Shares in Goldman have risen 3.8% since the start of 2015 compared with a 0.9% fall in the KBW index of bank stocks over the same period.

Trading revenue were $4.26 billion in the quarter, up 30% from $3.27 billion in the same period a year ago. That compares with a 9% increase in trading at J.P. Morgan Chase & Co. and a 5% drop at Bank of America Corp.

Within trading, revenue from bonds, foreign-exchange and commodities was up 10% and revenue from equities more than doubled.

Goldman's investment-banking division reported a profit of $1.91 billion, up 7.1% from $1.78 billion from the same period of 2014. In merger advisory, a business where Goldman is the industry leader, fees were $961 million, a 41% increase compared with $682 million a year earlier.

In investing and lending, Goldman's merchant banking division, profits increased 9.2% to $1.67 billion from $1.53 billion in the first quarter of 2014.

Firmwide expenses rose to $6.68 billion from $6.31 billion in the first quarter of 2014. Compensation and benefits expenses totaled $4.46 billion, up 11% from $4.01 billion in the first quarter last year. As a share of revenue, compensation and benefits were 42%, down from 43% a year ago.

Goldman bought back 6.8 million shares during the first quarter at a total cost of $1.25 billion. That's less than the $1.72 billion in shares it repurchased in the first quarter of 2014. Last month, the investment bank had to lower its request to return capital for the second consecutive year after the Federal Reserve nixed its original plan.

Write to Peter Rudegeair at [e-mail]

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