Apr 16, 2015 8:49 AM
Goldman Sachs' earnings soar on trading, deal fees
The Associated Press
NEW YORK (AP) Goldman Sachs says its first-quarter net income jumped as its investment banking unit logged its best quarter since the financial crisis. Higher fees from trading currencies and bonds also helped.
The bank earned $2.75 billion, or $5.94 a share, in the first three months of the year. That compares with $1.95 billion, or $4.02, in the same period a year earlier.
Revenue rose to $10.6 billion from $9.3 billion a year earlier.
Goldman is benefiting from an upswing in company deals in the U.S. driven by higher business confidence and low interest rates. Big moves in the bond and currency markets in the first quarter also boosted earnings at the bank as its trading business increased.
The results beat the expectations of Wall Street analysts, who had forecast per share of $4.26 and revenue of $9.4 billion.
Goldman said that revenue from investment banking was the highest it's been since 2007.
The biggest gain was at its financial advisory business, which advises companies on mergers, acquisitions and other deals. Revenue at the unit jumped 41 percent to $961 million in the first quarter. The big gain was somewhat offset by declines in debt and equity underwriting.
Goldman also reported a big increase in revenue at its bond and currency trading unit, as volatility in those markets picked up.
The dollar has gained 9 percent against the euro in the first quarter, a significant move. Other currencies have also been volatile. The Swiss franc had its biggest one-day move in history in January after the Swiss National Bank announced it would allow the franc to appreciate against the euro.
As asset prices become more volatile, traders place more bets to try to take advantage of swings in the market. As trading volumes rise, banks and brokers earn more in commissions.
Goldman's stock rose 90 cents, or 0.4 percent, to $202 a share in premarket trading. The bank's stock is up 3.8 percent this year and has outperformed the Standard & Poor's 500 index, which has gained 2.3 percent.