Investment bank Goldman Sachs said Tuesday that its first quarter profits rose by 26 percent, helped by a lower tax bill and a surge in market volatility.
Goldman earned $2.83 billion, or $6.95 a share, compared with $2.26 billion, or $5.15 a share, in the same period a year earlier. The results topped analysts’ forecasts, who were looking for Goldman to earn $5.58 a share, according to FactSet.
Revenue increased across its businesses, but most notably in trading, which saw revenue rise 31 percent from a year earlier. Trading-heavy firms such as Goldman Sachs tend to prosper when markets are more volatile, and Goldman was able to take advantage of a spike in market turbulence last quarter to lock in more profitable trades. Stock trading revenues more than doubled in the quarter.
Goldman also reported a steep drop in its tax bill this quarter, reflecting a similar decline that other banks like JPMorgan Chase, Citigroup and Bank of America also reported. Its effective tax rate was 17.2 percent in the quarter, compared to the bank’s historical tax rate in the mid-20 percent range.
The bank has in recent years started to diversify out of its traditional businesses, advising clients and trading, and into more Main Street forms of banking like personal loans and savings accounts under the Marcus brand. That business has been growing rapidly, and so have profits. Goldman’s investing and lending division had net revenues rise 43 percent from a year earlier.
Total net revenue for Goldman Sachs rose to $10.04 billion from $8.03 billion in the same period a year earlier.