Goldman Breaks From Wall Street Pack With Boom in Bond Trading

• April 17 2018
• Katherine Chiglinsky

Goldman Sachs Group Inc. is once again a Wall Street outlier, but this time in a good way.

Goldman Sachs Group Inc. is once again a Wall Street outlier, but this time in a good way.

The bank, which suffered a trading slump last year that was steeper than its rivals, said Tuesday that first-quarter trading revenue surged 31 percent, the biggest increase on Wall Street so far. It also reported the largest jump in fixed-income trading, after rivals Citigroup Inc. and Bank of America Corp. posted surprise declines.

Results from the first three months of this year are helping erase bad memories from 2017, which included the worst annual commodities performance in Goldman Sachs’s 19-year history as a public company. The first-quarter trading gains contributed to the highest revenue in three years and profit that surpassed analysts’ expectations.

The trading struggles in 2017 raised questions about the bank’s strategy and led to admissions that the firm hadn’t focused enough on corporate clients. Chief Executive Officer Lloyd Blankfein has maintained that many of the issues in the firm’s biggest business are cyclical and would improve with more active markets. Goldman Sachs benefited from a return of volatility to equity markets in the first quarter.

Goldman Sachs, which gained 1.2 percent this year through Monday, advanced 0.4 percent in early New York trading at 7:47 a.m. The KBW Bank Index has declined 0.2 percent this year.

The succession race to replace Blankfein became clearer last month, when David Solomon was named sole president of the bank and Harvey Schwartz, president and co-chief operating officer, said he was stepping down. While Schwartz rose up through the trading ranks, Solomon built his reputation in the investment-banking operation.

Here are more highlights from the first-quarter results:

• The bank reported net income of $2.83 billion, or $6.95 a share. The average estimate of analysts in a Bloomberg survey was $5.56 a share.
• Investment-banking revenue climbed 5 percent to $1.79 billion on a jump in underwriting fees.
• Revenue from investment management rose 18 percent to $1.77 billion.