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...