Goldman Sachs' earnings soar on trading, deal fees

Results beat expectations of Wall Street

By Steve Rothwell
AP Markets Writer

NEW YORK (AP) - Goldman Sachs posted a big jump in first-quarter net income Thursday as its investment banking unit logged its best quarter since the financial crisis. Higher fees from trading bonds and currencies also helped.

DOLLARS FROM DEALS: Goldman is benefiting from an upswing in company deals in the U.S., driven by higher business confidence and low interest rates. Goldman said revenue from its investment banking unit was the highest it's been in a single quarter since 2007.

TRADING BOOST: Big moves in the bond and currency markets in the first quarter also boosted earnings at the bank. Because markets were volatile at the start of the year, traders placed more bets to try and profit from those price swings. More trading activity means more commissions for banks and brokers.

THE NUMBERS: 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.

The results beat the expectations of Wall Street analysts, who had forecast earnings per share of $4.26 and revenue of $9.4 billion.

THE QUOTE: Goldman Chief Financial Officer Harvey Schwartz said corporate deal-making will likely remain strong in the near-term.

"When we talk to CEOs and boards...confidence continues to be high," Schwartz said on a call with investors and analysts. "There's a fair bit of activity out there, and we feel very well placed for it."

THE STOCK REACTION: Goldman's stock fell 83 cents to $200.27 in afternoon trading. The bank's stock is up about 3.5 percent this year and has outperformed the Standard & Poor's 500 index, which has gained 2.2 percent.

Published: Fri, Apr 17, 2015