By Peter Rudegeair 

Goldman Sachs Group Inc. reported record profit and revenue in the first quarter, benefiting from a turbocharged market and an economic recovery.

Goldman posted a quarterly profit of $6.84 billion, or $18.60 a share, on revenue of $17.7 billion. Both measures were up significantly from a year ago -- when the bank posted profit of $1.2 billion on revenue of $8.7 billion -- and exceeded the expectations of analysts polled by FactSet, who forecast profit of $10.22 a share on revenue of $12.56 billion.

The first three months of 2021 were a frenetic period for banks' capital markets and trading arms. Reddit-reading retail traders sent so-called meme stocks to new heights. Record amounts of money poured into blank-check companies, several of which announced deals during the quarter to bring fast-growing companies including Social Finance Inc. and Lucid Motors Inc. to the public markets.

Goldman thrived in that environment. Trading revenue rose 47% from a year ago to $7.6 billion, thanks to a 31% increase in fixed-income, currency and commodity trading revenue and a 68% increase in stock-trading revenue.

The firm's investment bankers brought in $3.8 billion in fees arranging mergers and securities offerings, up 73% from last year's first quarter and another record high for Goldman. Revenue from underwriting new initial public offerings, special-purpose acquisition companies and other sales of stock more than quadrupled to $1.6 billion.

The unwinding of large positions held by Archegos Capital Management in late March affected Goldman less than other banks, partially because the firm was among the first to offload Archegos's assets when the family office couldn't meet margin calls. Whereas Credit Suisse Group AG reported a $4.7 billion hit related to Archegos's meltdown, Goldman didn't report any material impact in its earnings release.

Shares of Goldman have risen 24% since the start of 2021 and hit an all-time high of $348.81 last month.

The bank's return on equity, a measure of how profitably it uses shareholders' money, was 31% on an annualized basis, its highest in a quarter since 2009.

Revenue in the bank's asset-management division, which includes funds and investments Goldman manages for itself and for clients, rose to $4.6 billion. Revenue in Goldman's consumer and wealth-management division, which includes its Marcus consumer bank as well as its team serving wealthy clients, rose 16% to $1.7 billion.

Operating expenses in the first quarter were $9.4 billion, up 46% from the same period last year. Compensation expenses rose 87% to $6 billion, or roughly 34% of revenue.

Write to Peter Rudegeair at Peter.Rudegeair@wsj.com

 

(END) Dow Jones Newswires

April 14, 2021 08:41 ET (12:41 GMT)

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