Goldman Sachs blowout Q1 results driven by FX related trading around the Swiss Franc spike

Goldman Sachs Group Inc (NYSE:GS) has today announced its quarterly earnings and revenue which has topped analysts’ expectations as a result of the unprecedented market volatility that resulted from the Swiss National Bank’s removal of the 1.20 peg on the EURCHF currency pair on January 15.

Goldman Sachs stated today that net revenues in fixed income, currency and commodities client execution were $3.13 billion for the first quarter of 2015, 10% higher than the first quarter of 2014, due to significantly higher net revenues in currencies and interest rate products, partially offset by significantly lower net revenues in credit products, commodities and mortgages.

During the first quarter of 2015 fixed income, currency and commodities client execution operated in an environment generally characterized by higher volatility levels, which contributed to higher client activity levels, particularly in currencies and interest rate products, and improved market-making conditions compared with the fourth quarter of 2014.

Additionally, in the first three months of 2015, Goldman Sachs’ net income applicable to common shareholders rose to $2.75 billion, or $5.94 per share, for the quarter ended March 31, from $1.95 billion, or $4.02 per share, in the same period of 2014.

Revenue rose to $10.62 billion from $9.33 billion a year ago. Revenue from trading fixed income, currencies and commodities rose 10 percent to $3.13 billion.

A Thomson Reuters consensus estimate depicted that the company was likely to report a first-quarter profit of $4.26 per share on revenue of $9.35 billion, however this estimate was exceeded by a considerable margin.

Goldman Sachs stock has risen 30% in the last 12 months, considerably higher than that of Wall Street rival JPMorgan Chase & Co. (NYSE:JPM) during the same time period, a firm which in itself achieved a 12% increase in profits during the first quarter of the year, largely due to increased volatility in the FX market.



Highlights of the quarter

• Goldman Sachs generated net revenues of $10.62 billion, the highest quarterly result in four years.

• The firm ranked first in worldwide announced and completed mergers and acquisitions for the year-to-date, and also ranked first in worldwide equity and equity-related offerings and common stock offerings for the year-to-date.

• Investment Banking produced net revenues of $1.91 billion, which is the highest quarterly performance since 2007.

• Institutional Client Services generated net revenues of $5.46 billion, which included the highest quarterly performance in equities client execution since 2010.

• Book value per common share increased $5.38 during the quarter to $168.39, the largest quarterly increase in over five years.

• The firm continues to maintain strong capital ratios and liquidity. As of March 31, 2015, the firm’s Common Equity Tier 1 ratio as computed in accordance with both the Standardized approach and the Basel III Advanced approach was 11.4% and 12.6%, respectively. In addition, the firm’s global core liquid assets were $175 billion as of March 31, 2015.

“We are pleased with our results this quarter and the fact that all of our major businesses contributed,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer of Goldman Sachs.

“Given more normalized markets and higher levels of client activity, we remain encouraged
about the prospects for continued growth” concluded Mr. Blankfein.

For the official announcement from Goldman Sachs, click here.



Chart: Goldman Sachs share prices over a monthly period. Courtesy of Google Finance

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