Goldman's investment banking unit posted revenue of $1.57 billion, compared with revenue of $1.16 billion in the year-earlier period. The firm cited a record $694 million in debt underwriting revenue, specifically in leveraged finance and commercial mortgage-related activity.
"Virtually all core [Goldman] business did pretty well," Richard "Dick" Bove, Rafferty Capital's vice president of equity research, told CNBC Tuesday. "The only core business that didn't do well was M&A, but I expect that won't do that well for the next couple quarters."
Total operating expenses were virtually unchanged at $6.72 billion.
Goldman's annualized return-on-equity, a closely watched measure of profitability, rose to 12.4 percent in the first quarter from 12.2 percent in the year-earlier quarter, but was still far below pre-crisis levels of above 30 percent.
The bank's average daily value at risk, which measures the maximum that Goldman could have lost on 95 percent of trading days, was $76 million during the first quarter, down from $95 million a year earlier.
Goldman said its Tier 1 capital ratio slipped to 14.4 percent from 14.7 percent.
The U.S. Federal Reserve told Goldman in March that its annual "stress test" showed that it needed to improve its capital plans. Chief Executive Blankfein said then that the bank would resubmit its capital plan with enhancements by the end of the third quarter.
Goldman's earnings follow better-than-expected numbers from JPMorgan Chase, Citigroup, and Wells Fargo.
JPMorgan reported quarterly profit that topped analysts' expectations and increased its dividend, but loan growth slowed and net revenue fell. Citigroup's earnings beat expectations on both profit and revenue, helped by improvements on loans and credit spreads.
Wells Fargo Wells Fargo reported a higher-than-expected rise in profit, but its mortgage business showed further signs of slowing and net interest margins continued to shrink.
"This quarter will be the biggest quarter in the history of the banking industry in terms of profits," Rafferty Capital's Bove said. "Why are they doing so well? They're doing so well because every major central bank in the world ... is increasing money supply dramatically. Goldman Sachs is in the money business. All that money gets converted into some sort of financial instrument. And those financial instruments get traded."
Goldman CFO Sees Higher Market Share
Goldman Chief Financial Officer Harvey Schwartz said he expects the bank to increase market share in its trading business as competitors back away due to higher capital costs and other regulations.
"It feels like there is reasonable market share opportunity, given the environment," Schwartz said on a conference call to discuss earnings on Tuesday. For competitors, "unless you're a leader in some of these businesses, I think it is a difficult time to build," he added.
Analysts questioned Schwartz about Goldman's trading business and how Goldman will respond to new regulations that will limit its ability to trade and invest its own capital.
Goldman's investing and lending unit, which trades on the bank's own account, posted revenue of $2.07 billion, accounting for 20.5 percent of overall net revenue—the second-largest contributor behind client trading. Client trading revenue fell 10 percent to $5.14 billion, but still accounted for nearly half of total revenue.
Analysts had forecast that the unpredictable investing and lending unit would generate revenue of anywhere from $1 billion to $2.2 billion.
The bank's proprietary trading has helped it beat analysts' expectations in many quarters, but also led to Goldman's second-ever loss as a public company in the third quarter of 2011.
Schwartz cautioned that the situation will take time to play out, but said Goldman has enough strength in areas ranging from commodities trading to prime brokerage to maintain a full range of trading businesses.
He also said that the bank is "constantly reviewing" its cost structure as the market environment changes to determine whether Goldman needs to hire or cut more staff. Goldman had 400 fewer employees at the end of the first quarter and operating expenses fell 1 percent.
—Reuters contributed to this report.