Goldman Sachs Group Inc posted stronger-than-expected quarterly profit, earning more money from bond trading than analysts had forecast.
The results helped assuage investor concerns that the bank's trading business was doomed to post lackluster returns for some time, and Goldman's shares rose 1.8 percent in premarket trading.
These numbers will probably begin to calm some of the fears that the market had been worried about, said Peter Cardillo, chief market economist at Avalon Partners in New York.
Client trading volume improved from the 2010 fourth quarter, which was unusually weak across Wall Street. The bank's revenue from trading for customers was down 22 percent from the first quarter of 2010. The year-earlier quarter was unusually strong.
Overall profit for common shareholders fell 72 percent, due in part to declining customer trading revenue and also due to a $1.64 billion charge to buy back $5 billion of preferred shares from Warren Buffett's Berkshire Hathaway.
The largest U.S. investment bank posted a profit to common shareholders of $908 million, or $1.56 a share. Analysts' average forecast was 82 cents a share, according to Thomson Reuters I/B/E/S.
Excluding the preferred redemption, Goldman would have earned $4.38 a share.
A year earlier, it earned $3.3 billion, or $5.59 a share.
Revenue fell 7 percent; revenue from fixed income, currency and commodities was down 28 percent.
Goldman Sachs set aside $5.23 billion for employee compensation in the quarter, a 5 percent decline from the same quarter last year.
(Reporting by Lauren Tara LaCapra and Dan Wilchins; Additional reporting by Angela Moon; editing by John Wallace)