Embattled Goldman Sachs (GS) said Tuesday that thanks to its trading and investing prowess, its first-quarter profit doubled to $3.5 billion, easily beating analysts' expectations. But the riches could prove an embarrassment as Wall Street's most powerful investment bank defends itself against civil fraud charges brought by the Securities and Exchange Commission.
For the three months that ended March 31, New York-based Goldman Sachs earned $3.5 billion, or $5.59 a share, up from $1.7 billion, or $3.39 a share, in the prior-year period. Analysts, on average, forecast earnings of $4.01 a share, according to data from Thomson Reuters. Profits from proprietary trading are essentially impossible to predict, making wide earnings beats from Goldman Sachs the norm.
Revenue for the period rose 36% to $12.8 billion from $9.6 billion in last year's first quarter, led by trading and principal investments, which jumped 61% to $9.2 billion.
"Our performance in the first quarter reflects more signs of growth across the economy and the strength of our client franchise," said CEO Lloyd Blankfein, in a statement. "In light of recent events involving the firm, we appreciate the support of our clients and shareholders, and the dedication and commitment of our people."
Rivals JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C), also reported better-than-expected results for the quarter, mainly on the back of strong fixed-income trading, but then, they haven't been charged with securities fraud.
Revenue from investment banking operations such as deal-making and underwriting, rose 44% to $1.2 billion from $823 million in last year's first quarter.
Goldman Sachs's earnings report comes just four days after the company was sued by the SEC for allegedly defrauding investors by misstating and omitting key facts about securities tied to subprime mortgages while the housing bubble was bursting. The SEC alleges that Wall Street's most illustrious and powerful investment bank created and sold a security without telling buyers it was designed to fail.
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