The Goldman Sachs Group, Inc. (NASDAQ:GS) on Thursday reported the highest profit in five years, gaining from trading bonds and currencies. Net Revenues of $10.62 billion and net earnings of $2.84 billion were reported for the first quarter ended March 31, 2015.
Swiss Central Bank to scrap the cap on Franc boosted trading, European Central Bank launched quantitative easing program, and US Federal bank tightened monetary policy. Trading rose by 23 percent to $5.46 billion in the first quarter. The shares hit the highest, since 2008 on Wednesday and were down by 0.3 percent in afternoon trading, raising questions about sustainable results.
“Investors almost always discount trading and investment results because they’re so volatile,” said Michael Wong, an analyst at Morningstar.
Wong speculated on lack of clarity on Goldman’s plans to return capital to shareholders. Diluted earnings per share rose to $5.94 from $4.02 in the first quarter of 2014 and $4.38 for the fourth quarter of 2014. Annualized return on average common shareholders’ equity stood at 14.7 percent in the first quarter of 2015.
Goldman Sachs has been focusing on trading fixed-income, currencies and commodities (FICC), when compared to other rivals who are shutting business, caused by new capital rules and reduced client activity. FICC revenue rose 14 percent to $10.62 million, and total net revenue rose 14 percent to $10.62 billion.
Goldman Sachs stated that higher net revenue from trading currencies and interest rate was partially offset by lower revenue from credit products, commodities and mortgages. Chief Executive Lloyd Blankfein stated that normalized market and client activity, encouraged the prospects for continued growth.
The firm has reached the top spot for announced and completed mergers and acquisitions for the year-to-date. Investment banking reported net revenues of $1.91 billion, highest quarterly performance since 2007. Institutional client services recorded highest quarterly performance since 2010, with net revenues of $5.46 billion.[ Via ]