Goldman Sachs profit beats estimates on trading revenue

Firm’s 10% increase in bond-trading revenue surpassed the 5% jump at JPMorgan Chase & Co

Goldman Sachs Group Inc reported first-quarter earnings that beat analysts’ estimates as the firm posted a bigger increase in revenue from trading debt, commodities and currencies than its rivals and the highest merger-advisory revenue since the financial crisis.

Net income rose 40 per cent to $2.84 billion (Dh10.4 billion), or $5.94 a share, from $2.03 billion, or $4.02, a year earlier, the New York-based company said yesterday in a statement. That beat the $4.26 average estimate of 26 analysts in a Bloomberg survey.

Chief Executive Officer Lloyd C. Blankfein, 60, has preached patience as he stuck with fixedincome trading businesses while many rivals cut back. His firm’s 10 per cent increase in bond-trading revenue surpassed the 5 per cent jump

Goldman Sachs rose 1.7 per cent to $201.10 in New York trading Wednesday. The stock has climbed 3.8 per cent this year. The firm has sought to entice investors through buybacks and dividends. It said last month it will increase its quarterly dividend to 65 cents and bought back $11.6 billion of stock the past two years.

Goldman Sachs may be limited in its capital return in the next few quarters, after it had to resubmit its plan to win Federal Reserve approval in the annual stress test last month. The firm got closest among the top six US banks to breaching regulatory thresholds in the first phase of the test, surpassing the 8 per cent minimum for total riskbased capital by 0.1 percentage point.

Goldman Sachs’ investmentbanking division has helped to counteract the trading revenue decline. The unit’s fees from advising on mergers and underwriting debt and equity jumped 8 per cent last year to the highest since the financial crisis, and its pretax profit margin climbed to 43 per cent.