Goldman Sachs boosts risk-taking on Wall St

Goldman Sachs Group Inc, unbowed by the securities industry's worst year since the Great Depression, increased its trading bets at the fastest rate on Wall Street.

Goldman Sachs's so-called value-at-risk, the amount the New York-based bank estimates it could lose from trading in a day, jumped 22 per cent to $240 million in the first quarter, twice what Morgan Stanley stands to lose, company reports show. VaR climbed 2.8 per cent in the same period at JPMorgan Chase & Co and dropped 14 per cent at Credit Suisse Group AG.

Offence beat defence in the first three months of 2009 as Goldman Sachs reported record revenue of $9.4 billion, dwarfing Morgan Stanley's $3.04 billion. Since Goldman Sachs and Morgan Stanley, the two biggest US securities firms, converted into banks in September, Morgan Stanley Chief Executive Officer John J Mack has reduced proprietary trading and principal investing to focus on the firm’s role as a financial adviser and broker.

“What stands out to me isn't so much that Goldman had a blow-out quarter, it's that Morgan Stanley had a disappointing quarter,” said Jeffery Harte, an analyst at Sandler O'Neill & Partners LP in Chicago, who has a ‘hold’ rating on both firms.

Morgan Stanley posted a $177 million loss in the first quarter and slashed its dividend by 81 per cent after real estate and debt-related writedowns. By contrast, Goldman Sachs, led by Chief Executive Officer Lloyd C Blankfein, reported better- than-estimated earnings of $1.81 billion in the same period.