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Goldman trumps profit estimates as bond trading shines


By Aparajita Saxena

(Reuters) - Sachs Group Inc blew past Wall Street's expectations for quarterly profit on Tuesday, as volatility in global markets powered a surge in bond and stock trading.

The bank's bond trading business outperformed, with revenue rising 23 percent in the first quarter.

Overall revenue from trading - Goldman's biggest business - was up 30.5 percent as volatility rocked global markets in February after a prolonged calm in 2017, roiling stocks, bonds, currencies and commodities, and remained elevated through the end of March.

The bank's shares rose 1.4 percent to $261.28 in early trading.

Total revenue, including net interest income, rose 25 percent to $10.04 billion, with all four businesses recording a rise in revenue.

described the $1.8 billion-$2.3 billion in revenue generated from each of its business units as "pretty impressive."

"Obviously it won't always be this good, but sure is cool to see a good old beat in a quarter that was far from the perfect backdrop," he wrote in a note to clients.

Following last year's sharp fall in bond trading, the laid out a growth plan to add as much as $5 billion in revenue annually by courting asset managers and to trade with the firm, expanding its footprint with corporate clients particularly in commodities and currencies, lending more to clients, and hiring more trading talent.

said the lender's management was "cautiously optimistic" that the factors leading to outperformance in the first quarter would continue.

The plan to generate more revenue by luring new clients and offering more products and services should provide an added lift, he said.

Net income applicable to common shareholders rose 27 percent to $2.74 billion, or $6.95 per share, and blew past the average estimate of $5.58 per share, according to I/B/E/S.

Investing and lending revenue rose 43 percent, while revenue from investment banking, which includes underwriting fees, rose 5.3 percent.

The lender's return on equity was 15.4 percent. Analysts typically like to see produce returns of at least 10 percent to meet their cost of capital.

Goldman's arch rival is scheduled to report quarterly results on Wednesday.

(Reporting By and in Bengaluru; Editing by Saumyadeb Chakrabarty)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, April 17 2018. 19:50 IST