If you work for Goldman Sachs in Asia, you might want to avoid dwelling on your bank’s regional performance over the first quarter of 2019. Goldman’s net revenues in Asia were $1,103m for Q1 – that’s down 40% (from $1,549m) year on year and down 3% compared with Q1, according to the firm’s earnings results.
The quarter just gone was also Goldman’s worst three-month performance since it began splitting out Asian revenues in Q3 2017, while the first quarter of last year was its best.
Why the slump in Q1? As always, Goldman’s financial report says nothing about its Asian business apart from providing the raw revenue numbers. But Dealogic figures suggest the blame lies with its investment bank in Asia outside of Japan. Goldman fell from first to third position year on year for IB revenues in ex-Japan APAC, below JP Morgan and Morgan Stanley, according to the data provider.
Goldman seems to have suffered the most in Asian M&A, where it placed only fifth in Dealogic’s Q1 regional revenue league table – down three places from a year previously. In contrast, international figures at Goldman show that M&A was a bright spot for the bank globally.
Meanwhile, the size of Goldman’s Asian revenues was brought into perspective by another US bank that reported yesterday: Citi. While Goldman made $1,103m (12% of its global revenues) in Q1, Citi generated $4,130m (22%).
This was not a one-off, as shown in the chart below, which compares Asian income at the two US firms stretching back to Q3 2017.
As the size of its results suggests, Citi is a universal bank in Asia, where it has some 50,000 people across 16 markets. Citi’s global consumer banking unit employs people in stable cash-cow functions that Goldman has little or no Asian presence in (e.g. cards and retail banking).
Strip out consumer banking, however, and the figures tell a slightly different story. Citi’s other division in Asia, institutional clients group (ICG), comprises corporate and investment banking, treasury and trade solutions, markets and securities services, and private banking – and it therefore competes in similar sectors to Goldman. ICG in Asia made $2,245m in the first quarter. That’s still double Goldman’s overall Asian total, but Citi is a whopping 274% ahead of GS when its entire regional revenues are included.
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