Peter Foley/Bloomberg via Getty Images Goldman Sachs Group (GS) reported an 11 percent drop in quarterly profit as client activity remained constrained and fixed-income revenue shrank, but both earnings and revenue beat market estimates and the Wall Street bank's shares rose. Goldman said net income fell to $1.95 billion, or $4.02 a share, in the first three months of the year from $2.19 billion, or $4.29 a share, in the same period of 2013. Analysts on average had expected earnings of $3.45 a share, according to Thomson Reuters I/B/E/S. Total net revenue fell 8 percent to $9.33 billion, but beat the average estimate of $8.70 billion. Goldman's shares, which had fallen more than 20 percent since the start of the year to Wednesday's close, were up 2.31, or 1.4 percent, to $159.53 in early trading. "Investment Banking and Investment Management generated solid results, while market sentiment shifted throughout the quarter, constraining client activity in various parts of our franchise," Chairman and Chief Executive Officer Lloyd Blankfein said in a statement. Most of Goldman's rivals also reported a drop in revenue from fixed-income trading in the quarter, but Goldman has more at stake than others because it has a less diverse business mix. Goldman's revenue from fixed income, currency and commodities trading fell 11 percent from a year earlier to $2.85 billion in the quarter ended March 31. Fixed income investors have been holding off on trading in the face of uncertainty about how quickly the U.S. Federal Reserve will tighten monetary policy. Goldman makes most of its money from trading and investing in capital markets. This sets it apart from JPMorgan Chase (JPM), Citigroup (C) and Bank of America (BAC), which have big consumer lending businesses, and Morgan Stanley (MS), which has a large wealth-management arm. The bank trades securities for clients, underwrites stocks and bonds, advises on mergers and has an investment-management business that caters to institutions and wealthy individuals. It also has a merchant banking business that makes investments and loans with its own money. Earlier Thursday, Morgan Stanley -- Goldman's closest rival -- reported a 55 percent jump in first-quarter earnings as higher revenue from its institutional securities business augmented another strong quarter from wealth management. Morgan Stanley said its FICC revenue increased 13 percent in the quarter, making it the only big U.S. bank to increase income from the fixed-income market in the quarter. Mixed Results Goldman produced mixed results in other areas of the market. Debt underwriting revenue fell 5 percent to $660 million due to a decline in refinancing activity, which had driven earnings for the past few years. However, equity underwriting revenue rose 12 percent to $437 million as a slew of companies filed for initial public offerings. Revenue in the company's investing and lending business fell 26 percent to $1.53 billion, reflecting the decline in fixed-income activity. Investment management revenue rose 20 percent to $1.57 billion. With business conditions remaining tough, Goldman has been cutting costs, particularly compensation. Compensation expenses fell 8 percent to $4.01 billion in the latest quarter while total operating expenses dropped 6 percent to $6.31 billion. But as the bank enters its fifth consecutive year of declining revenue, Blankfein is facing pressure to explain how Goldman will adapt and boost revenue. Fixed-income trading once accounted for more than 40 percent of Goldman's revenue on an annual basis. But since 2009 -- when markets flourished briefly in the aftermath of the financial crisis -- the business has declining almost steadily. New rules have forced banks to hold more capital against risky trades and limited their ability to trade for their own books. A lack of risk-taking among clients across fixed-income markets has also put a damper on results. Analysts expect market volumes to eventually pick up, there are questions about the long-term profit potential of fixed-income trading businesses for Wall Street banks -- a debate dubbed "cyclical vs. secular." Blankfein and other Goldman executives have steadfastly maintained that the changes to trading -- in terms of regulations, client preferences and lower revenue -- are temporary. As weaker banks exit the business, Goldman will be able to gain market share and raise prices, they have said.