Goldman Sachs' first quarter results are out. They're not exactly the greatest. While J.P. Morgan bankers allegedly have nothing to fear (according to Jamie Dimon), Goldman's staff have plenty to get worried about - not least the fact that a 13% increase in headcount since 2012 has prompted a 46% reduction in average pay as the bank pursues its policy of hiring juniors and recruiting in low cost overseas locations.
For the moment, debt capital markets (DCM) looks like the place to be at Goldman. The bank's fixed income sales and trading business had a horrible quarter, comparable with Morgan Stanley's, which begs the question whether the firm's fixed income trading business is too small to thrive in a world where the winner's take all.
Equity sales and trading looks tiny at Goldman, although is possibly deceptive as we've only included the bank's equities execution revenues and left out commissions and fees and securities services (which other banks don't necessarily include either).
Chart 11 underscores the extent to which Goldman really needs to cut costs after this quarter. - Something which Bloomberg says it's busy doing already, while chart 13 suggests any cost cutting is bound to fall disproportionately upon pay.
Does Goldman Sachs deserve its crown? You decide.
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