Goldman Sachs 1Q rev jumps 14% on trading

Boosted by large gains in trading, Goldman Sachs handily beat Wall Street's expectations for its first-quarter earnings, including a nearly 14% jump in revenue.

But the stock opened lower in early trading, down 1%, on concerns that the results are not sustainable.

The New York bank said it earned $5.94 a share for the three-month period ended in March, vs. $4.02 a share last year. Revenue came in at $10.62 billion — up 13.8% over the same period in 2014.

Wall Street was expecting earnings of $4.26 a share on revenue of $9.35 billion.

Goldman's results were driven by its trading business, a division that offers to buy and sell securities all day long, usually on behalf of large institutional investors like hedge funds. The goal is to profit on the spread between what was paid for a security and its selling price.

Revenues in that business came in at $5.46 billion, up 23% from the first quarter of 2014, and 73% higher than the fourth quarter of 2014.

Earlier this week, JP Morgan also posted better-than-expected first-quarter results due to large gains in trading.

Banks have been suffering from squeezed interest margins, or the amount they earn on loans, due to the long-term, low-interest-rate environment. But bright spots in non-traditional banking areas, such as investment banking and trading, have helped push some banks above the rest.

Indeed, Goldman's shares closed above $200 on Thursday for the first time since 2008 on expectations that it might outperform — thanks to its heavy focus on trading and investment banking.

Shares opened lower, however, on concerns that the gains were a fluke -- driven by institutional clients seeking profit from events specific to the last quarter.

Goldman said much of the boost in trading had to due with client demand for ways to deal with differing monetary policies coming out of Europe and the United States.

When asked in a conference call whether the gains in trading will continue, Goldman CFO Harvey Schwartz said its too early in the quarter to tell. "All these things are going to be driven by the environment," he said.

Goldman shares fell 1% to $199.05 a share, down from Wednesday's close of $201.10 a share,

Investment banking also helped to boost Goldman's first quarter, but to less of a degree than trading. Investment banking revenues were $1.91 billion, 7% higher than the same time last year.

Goldman's business advising clients, such as on mergers, brought in $961 million, 41% more than in the first quarter of 2014.

The only investment banking business that showed poor results was underwriting, which brought in $944 million, 14% lower than last year, which Goldman attributed to "significantly lower net revenues in debt underwriting."

Goldman's expenses also jumped, an unusual move at a time when most banks are seeking to cut costs. Operating expenses were $6.68 billion, 6% higher than the first quarter of 2014 and 49% higher than the fourth quarter of 2014.