Goldman crushes profit estimates as trading surges

(Reuters) - Goldman Sachs Group Inc <GS.N> blew past Wall Street's expectations for quarterly profit on Tuesday, powered by a surge in trading revenue and higher fees from debt and equity underwriting.

The lender's trading revenue jumped 30 percent from a year earlier when it reported a 2 percent fall, hurt by its worst bond trading results since the financial crisis.

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, helping Goldman book gains in both equity and bond trading in the first quarter.

Goldman's fixed income trading revenue stood out in sharp contrast with that of larger rivals. Revenue from the business rose 23 percent, while JPMorgan Chase & Co's <JPM.N> fixed income revenue was flat and Citigroup's <C.N> fell 7 percent.

Goldman's shares were up 1 percent in premarket trading.

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

Total revenue, including net interest income, rose 25 percent to $10.04 billion.

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

Historically known as an adviser to the world's richest people and corporations, Goldman Sachs has been trying to do more business with ordinary consumers to diversify its business by trying to shift to relatively stable ones like investment management and lending.

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

Goldman's arch rival Morgan Stanley <MS.N> is scheduled to report quarterly results on Wednesday.

(Reporting By Aparajita Saxena and Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty)

04/17/2018 8:38

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