Amidst recession, Goldman Sachs sees $1.8 bn profit

Washington: Bailed out US investment bank Goldman Sachs has reported a much stronger-than-expected first-quarter profit of $1.81 billion, bouncing back from its worst quarter as a public company.

The 140-year-old firm on Monday also set plans to raise $5 billion through a sale of stock, saying it wants to become the first big bank to repay the $10 billion in federal loans extended during last October's financial sector meltdown.

New York-based Goldman said it earned $1.81 billion, or $3.39 a share, for the quarter ended March 31 Analysts surveyed by Thomson Financial were looking for a profit of $1.64 a share, CNNMoney.com said.

Goldman shares, which have surged more than 70 per cent during the last month, continued rising late on Monday, gaining about 4.7 per cent for the day.

With the results, Goldman bounced back decisively from the last quarter of 2008, when it posted its only quarterly loss since becoming a public company in 1999, offering what the New York Times described as "a possible glimmer of hope for the banking industry."

The firm said the latest quarter's gains were driven by big profits in its fixed income business, where revenue surged to $6.56 billion - 34 per cent above the previous record.

But Goldman's principal investments lost $1.41 billion during the quarter, reflecting losses on real estate and a stake in a Chinese bank.

Goldman will still need the approval of regulators at Treasury and the Federal Reserve to repay the funding received as part of the government's Troubled Asset Relief programme, or TARP. Monday's announcement is the strongest indication yet of how eager Goldman is to return the funds.

If Goldman is permitted to repay its loan, it would be the first big bank to do so. But an early repayment could pose a risk to other banks that received government money, by rekindling investor concerns about their health, the Wall Street Journal said.

A handful of smaller banks already have taken steps to repay the government. The US has indicated it won't allow any major banks to do so before the government considers the results of financial "stress tests," which are expected by April 30.