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Goldman Revenues Tumbles, FICC Craters Down 44%; EPS Beat As Compensation Slashed

Tyler Durden's picture





 

On the surface Goldman's earnings, which just hit the tape at $2.88/share, and which beat expectations of $2.47 - higher than the $2.85 from a year ago - were far better than some of the worst case expectations. That is, until one actually looks at how they were derived. Sadly for Goldman's employees, the EPS beat was not due to a rise in actual revenues, which missed expectations of $7.35 billion massively, printing at $6.72 billion and down 20% from a year ago, but due a slashing in compensation expenses, which were brutalized from $3.7 billion in Q3 2013 and Q2 2013, to "only" $2.4 billion, a 35% Y/Y drop!

But back to revenue, which was an unmitigated disaster: the only bright light were Investment banking revenues which were $1.7 billion, unchanged from a year ago, if down 25% from Q2. It's all downhill from here, because the all important Fixed Income, Currency and Commodities group printed just $1.247 billion, down a whopping 44% Y/Y, well below expectations, followed by a tumble in Equity Client Flow, which at $1.6 billion, was down 18% from a year earlier. Alas not even Goldman was spared from the Q3 crunch, as both trading volumes appear to have tumbled, as well as actual prop misses impacted revenue. This can be seen in the firm's prop trading group, aka Investment and Lending, which printed at $1.5 billion down 18% from a year ago.

All in all, this was the worst quarter for Goldman's non-prop operations since Q4, and even so it was it was barely better by about $50 million.

What is notable, is that unlike other banks, where CEOs and CEOs can take reseve releases to offset cratering revenues, for Goldman this was not an option and the only way the bank could beat EPS was by actually slashing employee comp: that good old margin management tool. Sure enough, in Q3 the compensation margin tumbled to just 35.4%, well below the 44% average, and the lowest since the negative comp margin Goldman took in Q4 2009 when it was once again so desperate to beat EPS, it actually docked from employee comp accruals.

So much for any hopes that tapering, and a market in which only HFTs are left trading, can be navigated by even the best Wall Street Hedge Fund, pardon, Bank Holding Company.

 


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Thu, 10/17/2013 - 08:08 | Link to Comment Nothing but the...
Nothing but the truth.'s picture

 Now they're fiddling the books as well. A totally untrustworthy bunch of crooks .

Thu, 10/17/2013 - 08:09 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Crazy bastards shorted gold.....what were they thinking?

Thu, 10/17/2013 - 08:17 | Link to Comment Arius
Arius's picture

well, they recommended it to their clients and of course, they have to provide liquidity and take the other side ... that story will be told in few years when the tide is out and we will see who is swimming naked ... feel terrible for US muppets (not club members of course)

 

 

Thu, 10/17/2013 - 08:36 | Link to Comment Manthong
Manthong's picture

Is this what they mean when they say “Crime doesn’t pay”?

Thu, 10/17/2013 - 08:39 | Link to Comment Stuart
Stuart's picture

look at their FX calls of late....  lying pit of thieves they are.  Clients of Goldman are like a herd of cattle to a beef rancher.  

Thu, 10/17/2013 - 08:13 | Link to Comment max2205
max2205's picture

There goes RE prices in the hamptons....

 

Good to see GS eating their own for a change

Thu, 10/17/2013 - 08:32 | Link to Comment Headbanger
Headbanger's picture

Vampire squid calamari anyone?

Thu, 10/17/2013 - 08:08 | Link to Comment Quinvarius
Quinvarius's picture

I am sure their latest slam dunk is going to be great for next quarter too.

Thu, 10/17/2013 - 08:09 | Link to Comment prains
prains's picture

When you have set aside funds to help fend off upcoming litigation is said fund an asset or liability?

Thu, 10/17/2013 - 08:23 | Link to Comment Winston Churchill
Winston Churchill's picture

Yes.

Both.

Mark to reality is so 20th century.

Thu, 10/17/2013 - 08:55 | Link to Comment prains
prains's picture

So it's double-ended dildo accounting, I must ask my accountant for a demonstration

Thu, 10/17/2013 - 08:19 | Link to Comment Rainman
Rainman's picture

Bullish anyway....all the algos see is 2.88 !

Thu, 10/17/2013 - 08:26 | Link to Comment blindman
blindman's picture

cruel depression

Thu, 10/17/2013 - 08:26 | Link to Comment pupdog1
pupdog1's picture

I guess whorin', thievin', and trading against their clients is in less demand in these tough times.

Would anyone want a Goldman banker in their living room, or near their children?

Thu, 10/17/2013 - 08:28 | Link to Comment jballz
jballz's picture

 

so, good time to buy then?

Thu, 10/17/2013 - 08:48 | Link to Comment shovelhead
shovelhead's picture

Shame.

Muppet rape used to be such a remunerative field for the rank and file.

Times are tough all over.

Thu, 10/17/2013 - 08:54 | Link to Comment Urban Redneck
Urban Redneck's picture

Since Goldman's well/reserve pool is its clients' assets and they learned a lot what they know about "weathering the storm" from Jon Corzine - it's probably better that they suck it up this quarter- but if Stolper starts w/ daily recos to the muppets then you know what's really afoot...

Thu, 10/17/2013 - 10:29 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Yes, but what were their results in CHINA?  Don't you know about their 4 offices (Beijing, Shanghai, HK) there? 

They got thousands working there.  Upsizing there, downsizing here.  "Doing God's work" is now a global thing, and He needs them there more than here, it seems.  /s

Thu, 10/17/2013 - 11:10 | Link to Comment marathonman
marathonman's picture

Good thing we're adding that POS to the S&P 500 Index.

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