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Lex is a premium daily commentary service from the Financial Times. It helps readers make better investment decisions by highlighting key emerging risks and opportunities.

First, the good news. Goldman Sachs Group Inc.'s first-quarter earnings beat analysts' expectations – comfortably. Total net revenues were up 1 per cent year on year at about $10-billion (U.S.), but ahead of predictions for $9.7-billion, while earnings per share rose 9 per cent to $4.29 versus an anticipated $3.90. Investment banking revenues were up by a third (a better increase than both JPMorgan and Citigroup had in investment banking over the period) as debt and equity underwriting jumped by 63 per cent versus a year ago. The odd punt also paid off. Goldman's investing and lending segment, which was cordoned off in 2011 to house long-term loans and investments which Goldman believes will be permissible under the Volcker rule, jumped 8 per cent to $2-billion, the second biggest contributor to revenue. And, the ratio of revenues paid to staff dropped from 44 per cent in the first quarter of 2012 to 43 per cent.

Now, the bad news. Revenues in the trading business, which at $5-billion accounts for the single largest portion of revenue, fell by a tenth, while performance in the financial advisory business was flat. Goldman also said that the transaction backlog for investment banking decreased versus the end of 2012 and that raised concerns about the outlook for the coming quarters. Furthermore, future results from investing and lending segment, part of the first quarter's good news, are hard to predict because they can be volatile based on asset prices.

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Those bad bits were enough to prompt a slide in Goldman's shares, which fell 1.8 per cent. At $144, the stock is off the high of $159 for the year, but it still trades at 1 times tangible book value. Large banks continue to face tremendous uncertainty – as even their top brass admit. And, with revenue growth in doubt, more needs to be done on costs. Goldman's results were okay, but unfortunately okay is not good enough any more.

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