Goldman Unveils Its Employees Much Younger, Far Less Paid As FICC Revenues Plunge

As part of its presentation to the Barclays Financial Services conference this morning, Goldman revealed that it saw revenue growth opportunities of more than $5b over 3 years. As the slide below shows, this includes: $1BN+ in FICC, $2BN+ in lending/financing (with the bank's "Marcus" loan, deposit platform netting $1BN+), $500MM+ in investment banking, $1BN+ in investment management and $500m+ in equties clients.

The bank also disclosed that its Marcus loan, deposit platform, which is one of the higher paying savings programs available with a rate of 1.20%, recently crossed $1BN in loan originations, and expects to originate $2b by 2017 year-end.

Even more interesting was Goldman's observation of the collapse of traditionally most profitable for banks FICC sector, which according to Goldman has seen the addressable industry size/revenue plunge from $121 billion in 2009, when Goldman owned a 19% share of industry revenues, to just $66 billion, of which Goldman now holds a paltry 10%.

Of the current $66 billion in total addressable FICC revenue, Goldman holds roughly 10%, broken down between $6.7 billion in market making/liquidity provisioning (rather an oximoron in our days), and $0.9 billion in financing.

Also of note: Goldman's response to the shrinkage of its this profitable segment: a 30% drop in FICC comp and benefits, a 20% decline in FICC headcount in the past 5 years, coupled with a 50% plunge in RWAs and a 15% decline in allocated balance sheet space.

But what may be the most interesting slide in the entire presentation, is the following slide which confirms that in a world in which even the world's most powerful investment bank is now emphasizing traditional and boring NIM-based loan growth over debt-trading revenues, it has no choice but to trim its headcount. Substantially.

And, as the following slide shows, not only has Goldman been forced to get "younger", with a 13% increase in Associates and Analysts offsetting a 13% decline in Partners and MDs, but also the average comp ratio has plunged from 42.1% in the 2007-2011 era, to only 37.4% in the 2012-2016 period, with Goldman highlighting that in H1 2017 its public comp accrual was the lowest in the company post-IPO history.

In short, and rather amazingly, even Goldman is running out of ideas how to grow its legacy business and is now forced to morph into a plain old, boring bank which takes in deposits and gives out loans. No wonder Lloyd Blankfein appears less than enthused about running the universe these days...

Full Goldman slideshow link


Rebelrebel7 (not verified) Tue, 09/12/2017 - 12:23 Permalink

How is the  Goldman locks economy working out for you now  lloyd?! Let me guess, it's all Donald Trump's fault,  right?!Find people with no memory of your crimes so that they can continue to rip people off! Smoothe  move!1.2 % on depsits that you will charge tax payers 6% interest for ? Where do we sign up for this snowflake bank tax entitlement charity?! 

pitz Tue, 09/12/2017 - 13:56 Permalink

No long-term bottom in the banking sector until bankers earn similar to Wal-Mart retail employees. Every so often someone, on an online message board, claims that banks suffer from low interest rates.  I ask them how they can afford to pay their clerical employees (ie: most workers at a bank like Goldman Sachs) six-figure salaries.  That shuts 'em up pretty quick.