Goldman Sachs's first-quarter earnings surged 27% as the US investment bank's trading business rebounded in response to increased market volatility.

Net income for the three months to the end of March rose to $2.74bn (£1.9bn) from $2.16bn a year earlier. The result was a recovery from the final quarter of 2017, when Goldman posted a $2.1bn loss.

Group revenue rose 25% from a year before to $10.04bn – the highest quarterly total for three years.

Trading revenue jumped 31% to $4.39bn from a year earlier and 85% from the fourth quarter of 2017, driven by equities revenue of $2.31bn – up 38% from the first quarter of 2017.

“During the quarter, equities operated in an environment characterised by periods of high volatility and an increase in client activity compared with the fourth quarter of 2017,” Goldman said.

Revenue from fixed income, currencies and commodities rose 23% to $2.07bn as clients carried out more trades in response to market volatility. After a long period of relative calm, markets became more uncertain in the first three months of 2018 as inflation expectations increased and the Trump administration threatened to start a trade war with China and other competitors.

Lloyd Blankfein, Goldman's chief executive, said: “Solid performance across our businesses produced strong returns in the first quarter. We are well positioned to serve our clients as the global economy continues to show strength and central banks unwind certain aspects of policy stimulus. We are also broadening our client base and further diversifying our businesses to drive more revenue and earnings growth for the firm.”