Goldman Sachs Group Inc. (GS) on Tuesday reported a 6 percent increase in profit for the first quarter from last year, reflecting a surge in revenues at its investment banking unit on strong equity and debt underwriting activity. Both revenue and earnings per share beat analysts' estimates.
Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs said, "Our strong client franchise across our businesses drove generally solid results. Still, the potential for macro-economic instability was felt in the quarter and constrained overall corporate and investor activity. We continue to be very focused on controlling our costs and efficiently managing our capital."
New York-based Goldman Sachs' first-quarter net income increased to $2.19 billion or $4.29 per share from $2.07 billion or $3.92 per share in the year-ago period. On average, eighteen analysts polled by Thomson Reuters expected the company to report earnings of $3.88 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter rose 1 percent to $10.09 billion from $9.95 billion in the prior year quarter. Analysts had a consensus revenue estimate of $9.64 billion.
Net interest income declined 6 percent from the year-ago period to $925 million, while total non-interest revenues increased 2 percent to $9.17 billion.
The company's investment banking business recorded 36 percent growth in revenues to $1.57 billion.
Net revenues in financial advisory were essentially unchanged from last year at $484 million, while net revenues in the underwriting business rose 63 percent to $1.08 billion. This increase primarily reflected significantly higher net revenues in debt underwriting, due to leveraged finance and commercial mortgage-related activity.
Net revenues in institutional client services declined 10 percent to $5.14 billion. Net revenues in fixed income, currency and commodities client execution decreased 7 percent and net revenues in equities were 15 percent lower.
Net revenues in investing & lending increased 8 percent from last year to $2.07 billion. Revenues were positively impacted by an increase in equity prices and generally tighter credit spreads. The results also include a gain of $24 million from the company's investment in the ordinary shares of Industrial and Commercial Bank of China Ltd. or ICBC.
Investment Management revenues rose 12 percent to $1.32 billion, reflecting higher incentive fees and higher management and other fees.
Annualized return on average common shareholders' equity or ROE was 12.4 percent for the first quarter.
During the first quarter, Goldman Sachs repurchased 10.1 million shares of its common stock at an average cost per share of $150.53, for a total cost of $1.52 billion.
On April 15, the company's board of directors authorized the repurchase of an additional 75 million shares of common stock pursuant to the company's existing share repurchase program. The remaining share authorization under the existing repurchase program, including the newly authorized amount, is 86.4 million shares.
Goldman Sachs declared a dividend of $0.50 per common share to be paid on June 27, 2013 to common shareholders of record on May 30, 2013.
GS closed Monday's trading at $146.46. In Tuesday's pre-market, the stock is up $0.65 or 0.44 percent to $147.11.
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