Dream up any superlative that you like and you can attach it to Goldman Sachs’ first quarter performance. The bank posted its highest revenue in four years as every single one of its businesses topped analyst expectations. Net income increased by 40% to $2.84 billion, the highest earnings per share Goldman has reported in five years.
As for employees, there are somewhat competing narratives. With a great year comes lofty compensation numbers, and Goldman didn’t disappoint. Compensation expenses totaled $4.46 billion, up 11% from a year ago.
With 34,400 employees, Goldman paid out just shy of $130,000 per person – in a single quarter. Considering Goldman boasts relatively large middle and back offices that don’t command outlandish salaries, revenue generators and senior level execs likely took home whopping pay packages for the quarter.
The only bad news, if you can call it that, is that compensation as a share of revenue – the number bankers tend to obsess over – actually fell to 42% from 43% a year ago. Bankers got paid, that's for sure, but they still received a smaller piece of the pie than they did in 2014 when the bank didn’t perform near as well.
Goldman has made a habit in recent quarters of decreasing its comp ratio, so a potentially modest or poor quarter could result in more than a few frowns. Shares of Goldman Sachs tipped over $200 for the first time since 2008.
Elsewhere, Citigroup posted its highest quarterly profit in nearly eight years, though cost-cutting and fewer legal expenses were the main drivers. Operating expenses fell 10% to $10.88 billion as Citi slashed its comp pool.
Hiring and Firing Predictions for 2015 (eFinancialCareers)
Where will financial services firms in the U.S. be recruiting this year, and where will the axe fall? We’ve got some opinions.
The Oddest Interview Question You Might Hear (eFinancialCareers)
Glassdoor has just released its annual top 10 tough interview questions for 2015, and Jefferies comes in with a doozy.
Revolving Door Keeps Spinning (Bloomberg)
Former Fed chair Ben Bernanke threw us all a curveball by bypassing the private sector to become a blogger after he retired. That lasted about 10 minutes. He’s joining Kenneth Griffin’s hedge fund Citadel, where he’ll act as an adviser on monetary policy and the economy. Bernanke joins a host of other central bankers who have taken high-paying positions on the buy-side. He could take the seat vacated by Derek Kaufman, global head of fixed income at Citadel, who is leaving the firm after losing $1 billion last year in trades.
The Little Guys Have a Shot Now (WSJ)
Smaller hedge funds startups are now attracting as much capital as established funds. Managers with less than $5 billion recruited around half of the $76.4 billion the industry attracted last year, up from 37% a year ago. Small hedge funds have struggled since the crisis as investors looked for safe bets. Now they appear willing to take some chances (and are likely happier to pay smaller fees).
An Empty Threat From Hillary? (Fortune)
Fortune’s Dan Primack says Hillary Clinton’s threat to change the tax code on private equity and hedge fund staffers is nothing but word speak. President Obama made the same threat back in 2008 with a Democratic-led Congress and didn’t sniff making tax code changes. Hillary won’t either, he surmises.
Exodus Coming at Morgan Stanley? (Twitter)
Fox Business reporter Charlie Gasparino tweeted that some Morgan Stanley advisers are planning to bolt the firm after finding out that CEO James Gorman and investment banking head Colm Kelleher received hefty raises last year while compensation ratios for advisers were cut.
Wake Up People (New York Fed via Joe Weisenthal)
A shocking 42% of New York-based companies have trouble finding staffers who show up to work on time, up from 35% just two years ago. Also, it’s taking companies much longer to fill vacancies than it used to. Out-of-work financial services employees can certainly attest to that.
Buzz Around the Office
New 'Star Wars' Trailer Released (CNN)
Producers just dropped a new trailer for "Star Wars: Episode VII -- The Force Awakens." It’s worth a watch. R2-D2 has aged better than Harrison Ford.
Quote of the Day: “They crushed it. And it wasn’t like ‘gee, there’s one weird thing driving it.’ Trading was strong. Investment banking was strong.” – Jeff Harte, an analyst with Sandler O’Neill & Partners, on Goldman Sachs’ first quarter performance