Goldman Sachs Group Inc.'s (GS) first-quarter profit fell 23% as sluggish demand for dealmaking put a damper on results, though revenue declined less than feared.

Lighter client demand for trading and investment banking has been a sore spot for Goldman in recent quarters, putting pressure on two of the firm's prized sources of revenue.

An improved trading environment in the first quarter came as a welcome sign of relief across Wall Street, though investment banking activity remained choppy, particularly on the mergers-and-acquisitions front.

For the first quarter, the firm's revenue from fixed income, currency and commodity trading totaled $3.46 billion, down 20% from a year earlier although more than double what the firm booked in the fourth quarter.

Investment banking revenue came in at $1.15 billion, down 9.1% from a year, yet up 35% from a fourth quarter that was bleak across Wall Street.

"Because client activity remains relatively low in certain areas, especially in parts of investment banking, we believe that our mix of businesses gives the firm significant room for revenue growth as economic and market conditions continue to improve," Chief Executive Lloyd C. Blankfein said in a statement accompanying the firm's results.

Goldman posted a profit of $2.11 billion, compared with a year-earlier profit of $2.74 billion. Earnings per share--reflecting the payment of preferred dividends--rose to $3.92 from $1.56 a year earlier, topping the $3.55 per-share profit expected by analysts polled by Thomson Reuters.

The year-earlier period included a $1.64 billion preferred dividend that was tied to the firm's repayment of a $5 billion investment by Berkshire Hathaway (BRKA, BRKB).

Net revenue fell 16% to $9.95 billion. Analysts expected $9.48 billion in revenue.

The company boosted its quarterly dividend to 46 cents a share from 35 cents.

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