Goldman Sachs sails past Wall Street's expectations

Goldman Sachs sails past Wall Street's expectations

POSTED: Tuesday, April 16, 2013 - 9:00am

UPDATED: Tuesday, April 16, 2013 - 9:04am

Strength in investment banking helped Goldman Sachs report earnings and revenue that easily topped Wall Street's expectations.

First-quarter investment banking results were driven by strong activity in commercial mortgages and so-called leveraged finance, the risky, or high-yield, debt behind private equity transactions.

The bank reported a first-quarter profit of $2.26 billion, or $4.29 per share, on $10.1 billion of revenue.

Profits jumped by 7% from the prior year but were down 22% from the fourth quarter.

Investment banking revenue jumped 36% from the previous year and 12% from the fourth quarter of 2012.

But Goldman warned that revenue could slow in the current quarter, noting that its transaction backlog is lower than last quarter.

Despite increasing revenues and dealmaking, CEO Lloyd Blankfein noted that the bank witnessed a wariness among its clients.

"The potential for macro-economic instability...constrained overall corporate and investor activity," Blankfein said in a statement.

Blankfein said the bank remains committed to controlling costs.

Overall expenses dipped by 1% from last year but rose 36% from last quarter.

Goldman's stock, which has gained 15% so far this year, was up less than 1% in premarket trading.

Goldman Sachs is the fourth major bank to report earnings, following JPMorgan Chase, Wells Fargo and Citigroup.

Morgan Stanley and Bank of America are due out later this week.

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