Goldman Sachs shares close higher on Q1 results

NEW YORK — Shares of Goldman Sachs closed up slightly Thursday after the investment bank reported lower first-quarter net income in results that still topped Wall Street estimates.

Goldman's quarterly net income was $2.03 billion compared with $2.26 billion for the same period of 2013. The bank posted earnings per share of $4.02, below the $4.29 in last year's first quarter.

Quarterly revenue was $9.3 billion compared with $8.8 billion a year ago.

Financial analysts surveyed by Thomson Financial Network had forecast $8.7 billion in revenue and earnings per share of $3.45.

Goldman shares closed up 22 cents at $157.44 in Thursday trading.

The New York-headquartered bank said investment banking drove earnings results by posting net revenues of $1.78 billion — the best quarterly performance since 2007 and the national fiscal crisis.

Investment management generated net revenues of $1.57 billion, as assets under supervision rose to a record $1.08 trillion, up 12% from 2013, the bank said.

Accrual for compensation and benefits, including salaries, was $4.01 billion for the January-March period, an 8% decline from the first quarter of 2013. The bank said the drop reflected the decrease in net revenues. Total staff declined 1% compared with the end of last year, the bank reported.

Goldman Chief Financial Officer Harvey Schwartz told Wall Street analysts in a conference call that a macro review of the first quarter reinforced two themes: "Continued uncertainty around the strength of the global economic recovery," and "the dominant role that central banks play in driving broad economic activity and capital market sentiment."

"With respect to the first, market participants struggle to reconcile mixed economic data across different regional economies. They weight the prospect of a strengthening U.S. economy against an improved but still relatively weak European economy and a slowing economy in Asia," said Schwartz.

"Given the uncertainty surrounding the outlook for central bank activity, it is understandable that overall client sentiment and risk appetite was subdued," he said.

Schwartz also said Goldman:

• Repurchased 10.3 million shares of company stock for $1.7 billion during the quarter, completing buybacks under the bank's 2013 capital plan.
• Believes the evolution of market execution speed with the rise of high-frequency trading "has just gotten ahead of the market infrastructure and the market plumbing" a mismatch that must be corrected.
• Has "no strategic plans" for any immediate major changes with the bank's Sigma X platform, one of the world's largest private stock-trading centers. Several media accounts earlier this month reported the platform could be on the sale block.
• Plans to name new partners later this year, a much-watched selection process for the lucrative positions.

Citigroup financial analyst Keith Horowitz said in a report that Goldman's fixed income, currency and commodities unit posted stronger than expected results of $2.9 billion, 3% higher than Citi's forecast.

A research note by Keefe, Bruyette & Woods analysts said that revenue represented a 13% year over year decline but was "better than (banking) peers this quarter generally."