Goldman Sachs, buoyed by revenue from merchant banking and record trading and money management fees, reported the largest quarterly profit in the history of the securities industry and said the outlook on Wall Street is as “favorable” as it’s ever been.

Goldman shares rocketed 5.3%, the biggest one-day advance in three years, after the New-York-based firm said net income soared 64% in the fiscal first quarter to $2.48 billion, or $5.08 a share. Goldman’s earnings in the three months ended February 24 were greater than it netted in all of fiscal 2002 and topped the highest analyst estimate by more than 60%.

“It all went right, that’s all you can say with a number like this,” said Anton Schutz, who helps manage $275 million at Mendon Capital Advisors, including call options on Goldman shares.

“While we know that we cannot expect to achieve these results every quarter, we continue to see attractive opportunities,” Chief Executive Officer Henry Paulson, 59, said in a statement.

Goldman is the first of Wall Street’s five biggest investment banks to report the first quarter, building on the record $5.63 billion in profit it posted last year.

The average estimates in analyst surveys byThomson Financial were for profit of $1.57 billion and earnings per share of $3.29 in the quarter ended February 24. Goldman earned $1.51 billion, or $2.94 a share, in the year-earlier period.

The firm said its annualized return on common equity was 36.4%,or 38.8% excluding $237 million in non-cash costs. Goldman raised its quarterly dividend to 35 cents a share from 25 cents as revenue climbed to $10.3 billion.

Goldman’s value-at-risk, a barometer of how much it can lose on trading each day, rose to an all-time high of $92 million in the quarter, mostly because of bigger bets on equities. Revenue from trading fixed-income, currencies and commodities, Goldman’s biggest money-maker, rose 50% to $3.74 billion.

“The skeptics have said for probably about four years now these results can’t continue and we continue to have record results by the quarter and by the year,” Chief Financial Officer David Viniar said. “The business environment remains very favorable.”

Revenue from equities sales and trading advanced 58% to $2.45 billion. Goldman said it benefited from higher stock prices, as the U.S. Standard & Poor’s 500 Index gained 2.5%, London’s FTSE 100 Index and Hong Kong’s Hang Seng Index each rose 5.6%, and Japan’s Nikkei 225 Index increased 7.1% during the fiscal first quarter.

Lehman Brothers Holdings and Bear Stearns, the other two investment banks reporting this week, probably will say profit rose, too, according to Thomson surveys. Lehman shares rose 2.2%, Bear Stearns advanced 2.2%, and Morgan Stanley, which reports earnings next week, gained 2.6%.