Goldman Sachs reported its best quarterly profit in five years yesterday, notching up big gains from trading bonds and currencies as global markets gyrated during the first three months of the year.
Trading got a boost after the Swiss central bank scrapped a cap on the franc, the European Central Bank announced its quantitative easing programme, and the US Federal Reserve moved to tighten monetary policy.
That resulted in choppy trading that investment banks such as Goldman feed off. The bank’s total trading revenue rose 23 per cent to $5.46bn (£3.65bn) in the quarter ended March 31.
“Expectations were high heading into the quarter,” Keith Horowitz, an analyst with Citigroup, said. “While it’s only one quarter, it was a very impressive quarter.”
Goldman has been more committed to trading fixed-income, currencies and commodities (FICC) than some rivals, which are abandoning the business in the face of new capital rules and a slump in client activity.
FICC revenue rose 10 per cent to $3.13bn in the first quarter, after falling 29 per cent in the fourth quarter. Total net revenue rose 14 per cent to $10.62bn.
Goldman said higher net revenue from trading currencies and interest rate products was partially offset by lower net revenue from credit products, commodities and mortgages.