Despite Dip in Profits, Goldman Sachs Group Inc Tops Analyst Expectations

Goldman Sachs (NYSE: GS  ) reported this morning that its earnings per share dipped 6% from $4.29 in the first quarter of 2013 to $4.02 in the first quarter of this year; however, this was well ahead of the $3.45 expected by analysts. In total, net earnings at Goldman Sachs fell from $2.2 billion to $2.0 billion, a decline of 11%.

Goldman Sachs Tower. Source: Flickr / saebaryo.

"We are generally pleased with our performance for the quarter given the operating environment," noted Goldman Sachs Chairman and CEO Lloyd Blankfein in the company's press release. "Investment Banking and Investment Management generated solid results, while market sentiment shifted throughout the quarter, constraining client activity in various parts of our franchise."

Revenue at Goldman Sachs fell by 8%, or approximately $800 million, relative to the first quarter of last year. This was largely the result of decreased revenue from market making and other principal transactions operations, which saw declines of $798 million, or 23%, and $578 million, or 28%, respectively. However, it did see gains in its investment banking and management operations, as well as its net interest income, which helped offset the decline.

The firm did note that the $1.8 billion in revenue seen by its investment banking operations was the highest quarterly result since 2007. This was a 13% improvement over the first quarter of last year, and was driven largely by the increase of its financial advisory revenues, growing by 41% from $484 million to $682 million. In addition Goldman Sachs noted its investment management arm saw $40 billion in record inflows of long-term assets under supervision, bringing its total to $1.1 trillion.

Helping offset the dip in revenue for Goldman Sachs as a whole was a 6% reduction in expenses, which fell by approximately $400 million. This was largely the result of a $300 million drop in compensation and benefits expenses and its insurance reserves dropping from $127 million to $0.

"Our collection of businesses gives the firm significant room for growth as economic conditions broadly improve and we continue to remain focused on prudently managing our capital and cost structure," Blankfein said to conclude his prepared remarks.


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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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