The Goldman Party Is Back As Prop Revenues Soar, Average Compensation Surges To $404,172
Goldman is back. After the market beating hedge fund, which unlike its peers needs no DVA/CVA or loan loss releases to pad its numbers, was forced to exist in the scandalous shadow of its larger peers (coughjamiedimoncough), the tentacled one is back to making waves on its own, following a Q3 EPS beat of $2.85 on expectations of a $2.28 print, and revenues of $8.35 billion on expectations of $7.18 billion. The reason for the beat? A surge in Investing and Lending (aka Prop trading) revenues, which is the biggest quarterly variable, and which soared to $1.8 billion in Q3 from a paltry $203 million in Q2, and from a major loss of $2.5 billion in Q3 of 2011. All other business segments were in line, with IB down modestly from Q2, Client Flow in FICC in line sequentially, Client Flow in equities rising modestly due to a jump in Equities Client Execution, and a sequential drop in Investment Management. And that's it: no balance sheet or accounting gimmicks, which one has to at least give GS credit for. The bottom line for GS employees as a result of its hedge fund once again performing as expected? With compensation margin fixed firmly at 44% of net revenues, this means employee comp provisioning soared to $3.675 billion, far above the $2.9 billion in Q2 and $1.6 billion in Q3 2011. It also meant that the average comp for the firm's 32,600 in total staff at period end (up from 32,300 in Q2 and 32,400 in Q1) is now an average $404,172, the most since Q2 2011. It just may be a great bonus year for Goldman after all.
Revenue breakdown by segment: not the highlighted surge in Goldman Prop:
And average TTM employee comp. Whoosh.