New York: Goldman Sachs Group Inc reported first- quarter earnings that beat analysts’ estimates as the firm posted a bigger increase in revenue from trading debt, commodities and currencies than its rivals and the highest merger-advisory revenue since the financial crisis.
Net income rose 40 per cent to $2.84 billion (Dh10.4 billion), or $5.94 a share, from $2.03 billion, or $4.02, a year earlier, the New York-based company said Thursday in a statement. That beat the $4.26 average estimate of 26 analysts in a Bloomberg survey.
Chief Executive Officer Lloyd C. Blankfein, 60, has preached patience as he stuck with fixed-income trading businesses while many rivals cut back. His firm’s 10 per cent increase in bond-trading revenue surpassed the 5 per cent jump at JPMorgan Chase & Co. and Bank of America Corp.’s 7 per cent drop.
“Trading’s been a better story this first quarter than it has been in some time,” Devin Ryan, an analyst at JMP Group Inc, said before the results were announced. “The bar is still pretty low, but people are looking for that inflection point.”
JPMorgan Chase & Co said Tuesday that profit climbed 12 per cent, beating analysts’ estimates, as first-quarter revenue from trading stocks and bonds increased for the first time since 2010. Bank of America Corp Wednesday reported fixed-income revenue that fell amid declines in credit and mortgage trading.
Goldman Sachs rose 1.7 per cent to $201.10 in New York trading Wednesday. The stock has climbed 3.8 per cent this year.
Buy-backs, dividends
The firm has sought to entice investors through buy-backs and dividends. It said last month it will increase its quarterly dividend to 65 cents and bought back $11.6 billion of stock the past two years.
Goldman Sachs may be limited in its capital return in the next few quarters, after it had to resubmit its plan to win Federal Reserve approval in the annual stress test last month. The firm got closest among the top six US banks to breaching regulatory thresholds in the first phase of the test, surpassing the 8 per cent minimum for total risk-based capital by 0.1 percentage point.
Goldman Sachs’ investment-banking division has helped to counteract the trading revenue decline. The unit’s fees from advising on mergers and underwriting debt and equity jumped 8 per cent last year to the highest since the financial crisis, and its pretax profit margin climbed to 43 per cent.
Goldman Sachs holds the top spot among arrangers of global equity, equity-linked and rights offerings this year, according to data compiled by Bloomberg. It also ranks first in advising on announced mergers and acquisitions and sixth in underwriting US bonds, the data show.
The asset-management unit provided the biggest jump in revenue last year with an 11 per cent increase. The co-heads of that unit, Timothy O’Neill and Eric Lane, said earlier this year that annual growth will remain above 10 per cent in the next few years as more investors shift to actively managed funds and the firm lends more to wealthy individuals.
