Goldman Sachs' results: Fewer people, higher profits, higher pay

efinancialcareers.com:

Following on from Citi and JPMorgan, Goldman Sachs today announced its first quarter results. They're pretty good. As the chart below shows, Goldman outperformed its rivals in M&A and equities and fixed incomesales and trading, even if it lagged a little in equity and debt capital markets. 

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In combination with an 18% increase in asset and wealth management revenues and a 24% increase in platform revenues, growing revenues in investment banking and markets helped drive a 28% year-on-year increase in net earnings. Goldman Sachs' return on equity hit 15.9% for the first quarter as a result. 

Suddenly David Solomon looks vindicated.  Maybe he even deserves his 24% pay rise. 

If things continue in this vein, Solomon may not be the only person getting paid more at Goldman Sachs this year: the firm is generating higher revenues and higher profits with fewer staff, and its compensation accruals reflect that.

In the first quarter of 2024, Goldman spent $103k on compensation for its average employee, up 15% on the $90k it spent in the first quarter of last year. It helps that it has 1,000 fewer people, but it also helps that compensation spending rose 12% to reflect the revenue growth.

Some people at Goldman already seem more deserving of the higher pay than others. North American revenues at the firm rose 28% year-on-year in Q1; EMEA revenues fell 3%. Revenues from debt investments fell 15%, and Goldman registered $318m of credit losses in relation to credit cards and wholesale loans.

Some people may not survive until year-end. There are signs that the firm continues to tweak headcount. Having ended December with 45,300 employees, Goldman had only 44,400 by the end of March.

 H