Goldman's 1st-quarter net soars to $2.48 billion

March 15, 2006|By BLOOMBERG NEWS

NEW YORK -- Goldman Sachs Group Inc., buoyed by revenue from merchant banking and record trading and money management fees, reported yesterday the largest quarterly profit in the history of the securities industry and said the outlook on Wall Street is as "favorable" as it's ever been.

Goldman shares rocketed 6.2 percent, their biggest one-day advance in three years, after the firm said its net income soared 64 percent in the fiscal first quarter to $2.48 billion, or $5.08 a share. Goldman's earnings in the three months that ended Feb. 24 were greater than it netted in all of fiscal 2002 and topped the highest analyst estimate by more than 60 percent.

"It all went right, that's all you can say with a number like this," said Anton Schutz, who helps manage $275 million at Mendon Capital Advisors Corp., including call options on Goldman shares.

"While we know that we cannot expect to achieve these results every quarter, we continue to see attractive opportunities," Chief Executive Officer Henry Paulson said.

Goldman's revenue per employee rose 47 percent to about $437,100 in the first quarter from $296,400 a year ago. Compensation and benefits per employee jumped 51 percent to $224,200.

Revenue from equities sales and trading advanced 58 percent to $2.45 billion. Goldman said it benefited from higher stock prices, as the Standard & Poor's 500 index gained 2.5 percent, London's FTSE 100 Index and Hong Kong's Hang Seng Index each rose 5.6 percent, and Japan's Nikkei 225 Index increased 7.1 percent during the fiscal first quarter.

Goldman is the first of Wall Street's five biggest investment banks to report the first quarter, building on the record $5.63 billion in profit it posted last year.

Average estimates in analyst surveys by Thomson Financial were for profit of $1.57 billion and earnings per share of $3.29 in the quarter that ended Feb. 24. Goldman earned $1.51 billion, or $2.94 a share, a year earlier.

Shares of Goldman, the world's No. 2 securities firm by market value, jumped $8.70 to close at $149.42 yesterday on the New York Stock Exchange. They're up about 35 percent in the past year.

Riding its third straight quarter of record profit, the firm raised its quarterly dividend to 35 cents a share from 25 cents.

Revenue climbed to $10.3 billion, also a record.

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