Goldman Sachs Group Inc. (NYSE: GS) reported its first quarter financial results and crushed Wall Street estimates, sending shares 1.4 percent higher during Tuesday’s pre-market hours.
For the first quarter, Goldman Sachs reported revenue of $10.04 billion, increasing 25 percent year over year and topping Thomson Reuters analysts’ by $1.15 billion. The firm reported an EPS of $6.95, surpassing Thomson Reuters analysts’ estimates of $5.58.
Goldman Sachs’ strong quarter was driven by the substantial growth in its client services and investing & lending services. Institutional client services reported revenue of $4.39 billion, increasing 31 percent year over year and an 85 percent increase quarter over quarter. Investing & lending services increased by 31 percent year over year to $2.09 billion.
Revenue in fixed income, currency and commodities client execution was $2.07 billion, increasing 23 percent year over year, which fell short of estimates of $2.13 billion. The segment was driven by higher net revenues in currencies, commodities and credit products.
Revenue in equities trading were $2.31 billion, increasing 38 percent year over year, driven by revenue in equities client execution and topping Factset’s estimates of $1.92 billion.
The firm reported a return on equity of 15.4 percent for the first quarter.
“Solid performance across our businesses produced strong returns in the first quarter. We are well positioned to serve our clients as the global economy continues to show strength and central banks unwind certain aspects of policy stimulus.” said Lloyd Blankfein, Chairman and Chief Executive Officer.
Blankfein said in the earnings call that he will broaden Goldman Sachs’ client base and further diversify its business to drive more revenue and earnings for the firm.
David Solomon, current co-President, will replace Blankfein as the next Chief Executive Officer. Although, Blankfein has not confirmed yet when he will step down, but speculation hints that he may hold off until 2019. Goldman Sachs’ other co-President, Harvey Schwartz will step down and retire in April.
Goldman Sachs’ earnings follows after JPMorgan & Chase, Bank of America, Wells Fargo and Citigroup, who all beat analysts’ estimates. Morgan Stanley is expected to report on Wednesday.