Underwriting Props Up Goldman Sachs Results

The bank’s CEO said:

Our strong client franchise across our businesses drove generally solid results. Still, the potential for macro-economic instability was felt in the quarter and constrained overall corporate and investor activity. We continue to be very focused on controlling our costs and efficiently managing our capital.

Underwriting revenues grew 63% year-over-year, primarily due to debt underwriting and client activity. The firm’s investment banking revenues grew by 35% year-over-year.

Goldman’s Basel I Tier 1 capital ratio fell to 14.4%, down sequentially from 16.7% at the end of the fourth quarter. The Tier 1 common ratio also fell, from 14.5% at the end of 2012 to 12.7% at the end of the first quarter.

As was the case in the first quarter of 2012, the bank suffered a net outflow of assets under supervision, but by less than half as much. Outflows totaled $21 billion in the first quarter of 2012, compared with $9 billion this year. Assets under management grew by just $3 billion sequentially, however, with the major change coming in outflows of $15 billion from the firm’s money market accounts.

Shares are trading about 0.7% higher in the premarket this morning, at $146.46 in a 52-week range of $90.43 to $159.00. Thomson Reuters had a consensus analyst price target of around $148.35 before today’s results were announced.