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Goldman Sachs said that it would raise $5 billion (£3.4 billion) in a share sale to pay off its government loan, as the Wall Street bank revealed an expectation-beating $2.6 billion pre-tax profit for the first quarter of 2009. In an announcement made after US stock markets closed yesterday, the bank said that it would use cash raised from investors plus existing resources to pay off its entire $10 billion loan from the $700 billion Troubled Asset Relief Programme (Tarp) set up last year to bail out America’s banks. The bank, which had been expected to report its results today, will underwrite the sale. Goldman added that the repayment would be made at the discretion of its regulators and on the basis that it satisfied the demands of a stress test set by the US Treasury to measure which banks can withstand further economic deterioration. The Treasury is expected to announce its findings from the stress tests this month. Lloyd Blankfein, Goldman’s chairman and chief executive, said that he was pleased with the bank’s performance in the first three months of the year, given the difficult market conditions. The bank made its first quarterly loss as a public company in its final quarter last year. Analysts and investors described the figures as spectacular and hailed the debt repayment as great news and a sign that perhaps the financial sector has gone through the worst. However, shares in the bank slid about 1.5 per cent to $128.14 in after-hours trading. The bank will pay a dividend of 35 cents per share, down from 46.7 cents. Goldman made $2.6 billion in pre-tax earnings in the three months to March 27, up almost 24 per cent on the comparable period last year. Net income was $1.8 billion, up 20 per cent. The trading and principal investments division of the bank reported $7.1 billion in net revenues, up almost 40 per cent. Goldman’s investment banking division suffered from the downturn in deal activity and capital raisings, with net revenue down by 30 per cent to about $823 million. Asset management and securities services revenues were down by 29 per cent to $1.4 billion. Goldman switched this year so its financial year matched the calendar year instead of ending at November 29. So, it yesterday revealed its figures for December 2008, in which the bank made a $1.2 billion pre-tax loss. The bank’s speedy repayment of last September’s taxpayer loan is expected to put pressure on other banks that report their results over the coming weeks. JPMorgan Chase, which owes $25 billion to the Government, is due to report its first-quarter figures on Thursday and Citigroup, which owes $45 billion, on Friday. Paying off the Government will allow Goldman to throw off constraints set by the White House on executive pay, which banks complained hampered their ability to compete. The Treasury told the country’s biggest banks to participate in Tarp last October, to calm fears about the industry’s stability and to avoid singling out weaker banks, regardless of whether they needed extra cash. Kenneth Lewis, the chief executive of Bank of America (BoA), said last month that he was keen to repay his bank’s loan by late this year or early 2010, depending on the economy. BoA is to report its first-quarter results next Monday. Five small US banks have already repaid their loans and three more have announced plans to do so imminently. President Barack Obama met regulators last week to