Goldman is baaaaaack…. if only in soaring compensation.
While the firm reported trading results that were largely unspectacular in Q2 (very much as the Jefferies early glimpse foretold) with solid drops on a Q/Q basis in the two key revenue categories, FICC down 23% from Q1 and at $2.46 billion it missed expectations of a $2.53 billion print and Investing and Lending, i.e., Prop Trading, which had its worst quarter in one year and was down 32% Q/Q, not to mention a 21% plunge in revenues from equities client execution, it was the usual game of beating lowered expectations that allowed the firm to glide through its Q2 results. EPS was expected at $2.89 and came at $3.70; Revenues was expected at $7.97 billion and came at $8.61 billion, down 15% from Q1 but 30% better than a year ago; I-Banking down 1% to $1.55 billion but beating expectations of $1.35bn, Investing and Lending plunging but at $1.42 bn beating expectations of an even greater drubbing at $870MM.
Also of note: VaR of $81MM rose from $76 in Q1 but dropped from the $92MM a year ago.
But the most memorable result was that comp and benefits printed at $3.7 billion, which while a drop of 15% from Q1, was a jump of 27% from a year ago. As a result of this moving the trailing 4 quarter average higher, and due to the drop in headcount yet another quarter, from 32K to 31.7K, it means that the average compensation per Goldman employee climbed to a fresh three-year high of $431,956, up 7.1% from Q1, and up a whopping 25.9% from a year ago. Not bad for a very unimpressive quarter.
Finally, for all the talk about a “great rotation”, when it comes to Goldman’s Assets Under Supervision, the firm saw an inflow of $1 billion in equities, compared to a $10 billion inflow in fixed income. Of course, the non-rotation was promptly undone by $11 billion in “net market depreciation.”