Goldman Sachs Group Inc reported its best quarterly profit in five years on Thursday, notching up big gains from trading bonds and currencies as global markets gyrated during the first three months of the year.
Trading got a boost after the Swiss central bank scrapped a cap on the franc, the European Central Bank announced its quantitative easing program, and the U.S. Federal Reserve moved to tighten monetary policy.
That resulted in choppy trading that investment banks such as Goldman feed off. The bank's total trading revenue rose 23 percent to $5.46 billion in the quarter ended March 31.
Goldman's shares were little changed at $201.21 in early trading, a day after the stock closed at its highest since May 2008 on heavy volume.
"Expectations were high heading into the quarter," Keith Horowitz, an analyst with Citigroup, wrote in a note to clients. "While it's only one quarter, it was a very impressive quarter and we believe it will likely lead to outperformance today."
Goldman has been more committed to trading fixed-income, currencies and commodities (FICC) than some rivals, which are abandoning the business in the face of new capital rules and a slump in client activity.
FICC revenue rose 10 percent to $3.13 billion in the first quarter, after falling 29 percent in the fourth quarter.
Total net revenue rose 14 percent to $10.62 billion.
Goldman said higher net revenue from trading currencies and interest rate products was partially offset by lower net revenue from credit products, commodities and mortgages.
"Given more normalized markets and higher levels of client activity, we remain encouraged about the prospects for continued growth," Blankfein said in a statement.
The bank posted a bigger gain from trading than JPMorgan Chase & Co in the quarter. Bank of America Corp and Citigroup Inc reported declines. Morgan Stanley reports earnings on Monday.
Goldman's investment banking revenue rose 7.1 percent to $1.91 billion, the highest since 2007.
Net income applicable to common shareholders rose 41 percent to $2.75 billion, or $5.94 per share, beating the average estimate of $4.26, according to Thomson Reuters I/B/E/S.
Goldman's return on equity was 14.7 percent in the quarter, compared with 10.9 percent a year earlier.
Compensation and benefit expenses rose 11.2 percent but were down slightly as a percentage of net revenue.
Total operating expenses rose 6 percent to $6.68 billion. (Reuters)
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