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 [4]) 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.
[5]
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.
[6]
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."
[7]