Goldman Sachs' profits miss forecasts as trading struggled

Despite strong gains in US stocks at the beginning of this year which boosted the markets revenues of most big banks, Goldman Sachs did not benefit from trading almost as much as investors had expected during the quarter.

Income from share dealing fell and fees from bond, currency and commodity trading were relatively flat. Bank of America reported a 17% increase in FICC revenue this quarter over the same period past year. Shares of the company slid 3.5 percent to $218.25 at 9:32 NY, the worst performance in the Dow Jones Industrial Average.

But Reuters said analysts seemed unsatisfied with the explanations from Chavez and outgoing CFO Harvey Schwartz.

Credit Suisse analyst Christian Bolu said Goldman investors were showing some "nervousness" about the strength of the business, and UBS's Brennan Hawken chastised the performance, saying that topping the prior year should have been "kind of easy."I'm not fully - I'm still confused", said Hawken, adding, "I have some company".

Goldman Sachs also announced the repurchase of an addition 50 million shares of common stock and raised its quarterly dividend to 75 cents from 65 cents per common share. Overall the Goldman Sachs trading revenue declined 2.4% to $3.36 billion from a year earlier.

Goldman's results were particularly poor when compared to Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), and Citigroup (NYSE:C), all of which reported improvements in trading revenue.

More than other large financial institutions, Goldman relies on trading to generate a profit.

Net income nearly doubled to $2.26 billion, or $5.15 a share, from $1.14 billion, or $2.68, a year earlier, the company said in the statement.

The surprise results contrast with reports from Goldman Sachs's three bigger competitors. The first quarter is typically the strongest for trading desks, as the investors return from the holidays and reposition their portfolios for the new year. Analysts had expected earnings of $5.31 a share on revenue of $8.446 billion. The bank's expenses rose just 15 percent and it paid out a smaller share of its revenue to employees. Its closely watched compensation-to-revenue ratio was 41 percent in the first quarter, down from 42 percent a year earlier, but higher than the 38 percent ratio it reported for all of 2016. Goldman's chief rival Morgan Stanley will report on Wednesday.