GS) reported first-quarter earnings on Tuesday that topped Wall Street's expectations, helped by higher revenue in its investment banking arm.Goldman Sachs (
After the earnings announcement, the investment banking giant saw its shares gain in pre-market trading. (Click here to get the latest quotes for Goldman Sachs.) (GS)
Goldman posted quarterly earnings excluding items of $4.29 per share, versus $3.92 in the comparable year-ago period.
Revenue increased to $10.09 billion, from $9.95 billion a year ago, while revenue from trading in fixed income securities, currencies, and commodities on behalf of clients dropped 7 percent to $3.22 billion
Analysts had expected Goldman to report earnings per share of $3.88 on $9.715 billion in revenue, according to a consensus estimate from Thomson Reuters.
Goldman's investment banking unit posted revenue of $1.57 billion, compared with revenue of $1.16 billion in the year-earlier period. The firm cited a record $694 million in debt underwriting revenue, specifically in leveraged finance and commercial mortgage-related activity.
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"Our strong client franchise across our businesses drove generally solid results," Lloyd C. Blankfein, chairman and chief executive officer, said in a statement. "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."
The investing and lending unit, which trades on the bank's own account, posted revenue of $2.07 billion, accounting for 20.5 percent of overall net revenue-the second-largest contributor behind client trading. Client trading revenue fell 10 percent to $5.14 billion, but still accounted for nearly half of total revenue.
Analysts had forecast that the unpredictable investing and lending unit would generate revenue of anywhere from $1 billion to $2.2 billion.
The bank's proprietary trading has helped it beat analysts' expectations in many quarters, but also led to Goldman's second-ever loss as a public company in the third quarter of 2011.
Total operating expenses were virtually unchanged at $6.72 billion.
Goldman's annualized return-on-equity, a closely watched measure of profitability, rose to 12.4 percent in the first quarter from 12.2 percent in the year-earlier quarter, but was still far below pre-crisis levels of above 30 percent.
The bank's average daily value at risk, which measures the maximum that Goldman could have lost on 95 percent of trading days, was $76 million during the first quarter, down from $95 million a year earlier.
Goldman said its Tier 1 capital ratio slipped to 14.4 percent from 14.7 percent.
The U.S. Federal Reserve told Goldman in March that its annual "stress test" showed that it needed to improve its capital plans. Chief Executive Blankfein said then that the bank would resubmit its capital plan with enhancements by the end of the third quarter.
-Reuters contributed to this report.
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