7:59 a.m. | Updated
Goldman Sachs on Tuesday reported a first-quarter profit of $2.2 billion, or 4.29 a share, up from the year-ago period and driven by investment banking and investment and lending. It was well of analysts’ expectations of $3.89 a share, according to Thomson Reuters. Earnings per share were up 9 percent when compared to the same quarter in 2012.
Analysts had been anticipating a fairly decent quarter for Goldman, in part because many of its rivals have posted strong results in their investment banking and securities divisions.
“Our strong client franchise across our businesses drove generally solid results. Still, the potential for macro-economic instability was felt in the quarter and constrained overall corporate and investor activity. We continue to be very focused on controlling our costs and efficiently managing our capital,†Goldman’s chairman and chief executive, Lloyd C. Blankfein, said in a press release.
The results had an immediate effect on the firm’s stock, sending it up slightly in premarket trading on Tuesday.
The firm reported $10.1 billion in revenue in the quarter ended March 31, almost flat from year ago levels when revenue came in at $10 billion. Analysts had been forecasting revenue of $8.35 billion.
Net revenue in Goldman’s powerful division that trades bonds, currencies and commodities was $3.2 billion, down 7 percent from the year-ago period. The firm said net revenues were lower in most businesses, “primarily reflecting significantly lower net revenues in interest rate products compared with a strong first quarter of 2012.â€
The firm’s investing and lending division however did quite well, posting revenue of $2.07 billion, up 8 percent from year-ago levels. Goldman said this unit benefited from an increase in equity prices in the quarter, and a $24 million gain from the firm’s stake in the Industrial and Commercial Bank of China, a strategic investment Goldman made in 2006.
The firm’s investment banking division also weighed in with strong first quarter results, posting revenue of $1.57 billion, up 36 percent from the year-earlier period. The firm attributed the rise to “significantly higher net revenues in debt underwriting, due to leveraged finance and commercial mortgage-related activity. “ Goldman added that revenues in equity underwriting were also “significantly higher compared with the first quarter of 2012, reflecting an increase in client activity.â€
Goldman is one of a number of Wall Street banks releasing earnings this week. Morgan Stanley will round out bank earnings season on Thursday. Analysts polled by Thomson Reuters are expecting it to earn 57 cents a share.
