Goldman’s Improved Returns Come at Higher Risk


Goldman Sachs is replacing one earnings problem with another.

The bank left behind years of ho-hum profit with an estimate-beating $2.75 billion in the first quarter. That equates to an annualized return on equity of 14.7 percent, which is arguably at the upper end of what a player like Goldman can expect to earn. The firm kept costs down, but trading accounted for much of the increase. That means the improved returns come at a higher risk.

Revenue from Goldman’s fixed-income, currency and commodities, or F.I.C.C., desks rose only by a 10th from the same period last year. But revenue rocketed 157 percent from the fourth quarter. That’s courtesy of various central bank actions in the first three months of the year that drove up both volatility and trading volume in interest-rate and foreign exchange products…

Goldman’s Improved Returns Come at Higher Risk

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