Goldman Sachs Group
reported higher profit and revenue from a year ago, catching the wave of lower taxes and newly active markets that boosted other big banks’ quarterly earnings.
Revenue at the Wall Street firm rose to $10.04 billion from $8.03 billion a year ago. Goldman’s profit was $2.83 billion, or $6.95 a share, up 26% from the year-ago first quarter when the bank’s traders made bad bets on the dollar and interest rates.
Analysts, on average, were expecting earnings of $2.21 billion, or $5.58 a share, on revenue of $8.74 billion, according to Thomson Reuters.
Each of Goldman’s four business lines reported higher revenues from a year ago. The firm’s return on equity, a measure of profitability, stood at 15.4% for the quarter, Goldman’s highest in six years. That comes even as the firm is pouring money into a three-year growth plan.
Shares, which were up 1.2% in 2018 through Monday, rose 0.9% to $260.12 in premarket trading.
For all of Goldman’s changes in recent years—launching a consumer bank and embracing steadier businesses like asset management and corporate lending—it still relies heavily on its traders, who make money buying and selling everything from stocks to interest-rate swaps.
Their recent troubles have spurred criticism that Chief Executive
who once ran Goldman’s trading arm, didn’t act quickly enough to reposition the firm for the postcrisis world. Calm markets and the popularity of passive investing have sapped demand for the sophisticated and expensive products Goldman was known for, while new regulations closed its once-profitable proprietary trading desks.
But the business roared back to life in the first quarter as volatility returned to the markets. The dollar fell, and interest rates rose. Stocks swung around amid fears of a trade war and as the tumult at
weighed on shares of technology companies.
Goldman reported a 38% increase in stock-trading revenues and a 23% increase in fixed-income trading, which includes bonds, currencies and interest-rate products.
In fixed-income, its headline increase was bigger than rivals, but Goldman faced a lower bar after trailing its peers in the first quarter of last year.
Investment-banking, the business of arranging mergers and helping companies raise money, reported a 5% increase in revenue from a year ago, with a rise in underwriting compensating for a decline in merger fees.
The surprise factor in Goldman’s earnings is often its opaque investing-and-lending segment, which comprises everything from simple mortgages to illiquid investments in private startups. Revenue in that division rose 43% to $2 billion.
During the quarter, Goldman sold its last shares of credit bureau TransUnion, sealing in a roughly $3.3 billion profit on the six-year-old deal. Kensho Technologies Inc., an artificial-intelligence firm that Goldman was an early investor in, was sold to S&P Global.
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