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Fixed income is the star of show

WE LIVE in strange times. News that Goldman has yet again smashed analyst expectations is a mere sideshow to the crisis that engulfs the bank. It was strong trading at the bank’s fixed income, currency and commodities (FICC) unit that boosted profitability, with revenues up to $7.4bn, against $4bn in the last quarter of 2009 and $6.6bn in the same period last year.

Equity commissions failed to live up to the booming first quarter of 2009, falling from $974m to $881m, although this was more than offset by strong derivatives revenues.

The uncertainty of new derivatives regulations means that investors shouldn’t rely on this income stream going forward, however.

Citigroup estimates that the lower-than-expected compensation ratio, at 43 per cent to Citi’s forecast of 48 per cent, added $0.70 to earnings per share. Welcome news for investors, but unlikely to silence the baying mob.