Goldman Blows Past Earnings On Record Debt Underwriting
- First-quarter EPS of $4.29 a share, beating the consensus estimate of an adjusted $3.86 a share, according to data compiled by Bloomberg
- Excluding items, first-quarter net income was $2.26 billion, beating the consensus estimate of $1.97 billion.
- Net revenue came in at $10.09 billion, surpassing an estimate of $9.65 billion.
- Return on equity was 12.4%, Goldman's fourth-quarter ROE was 16.5%.
NEW YORK ( TheStreet) -- Goldman Sachs
Goldman's earnings were buoyed by sharp year-over-year revenue gains in the bank's debt and equity underwriting units, which drove overall investment banking revenue higher by 36% to $1.57 billion.
Analysts said the significant earnings beat also hinged on over $1 billion in private equity investment gains and continued tight management of the bank's expense.
Earnings at the nation's top standalone investment bank also reflected record quarterly debt underwriting revenue of $694 million, according to a company statement.
For the quarter, Goldman reported a profit of $2.26 billion, on revenue of $10.09 billion, beating adjusted estimates of $1.97 billion and $9.65 billion respectively.
Adjusted earnings per share of $4.29 surpassed an adjusted estimate of $3.86 a share, according to analyst forecasts compiled by Bloomberg.
Goldman Sachs shares fell less than 1% to $144.96 in early Tuesday trading.
"We think the market will largely ignore the investment gains but the strong
Goldman's investment banking unit and investment management business posted particularly strong results relative to expectations, while equity trading revenue of $1.92 billion came in lower than some analyst estimates.
Investment banking revenue of $1.57 billion reflected a 36% year-over-year increase, while net revenue from the firm's Institutional Client Services unit, more generally known as trading, came in at $5.14 billion, dropping 10% from the first quarter of 2012.
Goldman's earnings indicated the firm's investment banking unit outperformed competitors JPMorgan
The analyst, however, noted the 10% decline in Goldman's trading revenue was slightly worse than 5% declines posted by JPMorgan and Citigroup. Bank of America
Goldman's investment management unit posted $1.32 billion in revenue, reflecting a 12% rise from the first quarter of 2012. The unit posted $9 billion in client asset outflows, largely on money market assets and alternative investments, even as the firm saw a rise in equity and fixed income assets.
"Better than expected investment banking and investment management revenues roughly offset the revenue miss in trading," Brennan Hawken, a UBS analyst, wrote in a note to clients.