$2.7 Billion In Profit For Goldman Sachs Blows Out Projections

Thanks, as usual, to a jump in fixed income trading.

Goldman Sachs chairman and CEO Lloyd Blankfein.

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The finance's industry most formidable trading powerhouse continued a run of positive results across Wall Street. Goldman Sachs said that the bank had $10.6 billion in revenue for the frist quarter of this year, outpacing analysts' expectations of $9.3 billion, and rising 14% from the first quarter of last year. The bank's profits were $5.94 per share with some adjustments, beating out projections of $4.26 and rising 48% from a year ago. The bank's net income was $2.8 billion.

Goldman's stock has been on a run this year, up almost 3% this week before it reported earnings, following strong trading results from one of its largest rivals, JPMorgan Chase and rising above $200 for the first time since 2008 to $201.10 by the end of trading Wednesday. The stock has risen 4% since the beginning of this year. In early trading, Goldman shares were up almost 1%.

The blowout first quarter — the highest revenue quarter in four years, the bank said — was anchored, as usual, by strong performance in its fixed income, currencies, and commodities unit, which had $3.1 billion in revenue, exceeding projections of $2.9 billion and up 10% from the first quarter of last year.

The bank attributed the strong results to "significantly higher net revenues in currencies and interest rate products," as markets became more volatile, especially in foreign exchange, during the beginning of the year. "Higher volatility levels [...] contributed to higher client activity levels, particularly in currencies and interest rate products," the bank said.

Goldman's investment banking unit, which strikes deals like mergers, spin-offs, and initial public offerings had its best quarter since 2007, the bank said, with $1.9 billion in revenue, up 7% from a year ago.

"We are pleased with our results this quarter and the fact that all of our major businesses contributed," Godlman's chief executive Lloyd Blankfein said in a statement. "Given more normalized markets and higher levels of client activity, we remain encouraged about the prospects for continued growth."

With record setting revenue, however, came high pay for Goldman's employees. The bank said employee compensation and benefits cost some $4.5 billion, 11% more than the first quarter last year. The ratio of compensation to revenue, however, declined from 43% to 42% over the year. Goldman has a total staff of 34,400.

"We have long had a pay for performance culture," Blankfein said in a presentation in February. "[There is a] strong correlation between the firm's performance and its levels of compensation.

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