Morning Coffee: Key facts you missed from Goldman’s Q1 earnings. No Ivy League school made the top 10 of this list
After Goldman Sachs announced its first-quarter results yesterday, you probably read the headlines proclaiming that the bank’s profits and bonuses plunged. You likely saw that its quarterly profit tumbled 55% year-over-year, more than any of its major competitors, of which Wells Fargo (-5%) and J.P. Morgan Chase (-7%) fared the best.
You may have seen that Goldman’s Q1 bonus pool was $2.66bn, an average of less than $73k per employee for the first three months of the year – a 40% drop from a year ago.
That said, here are other key takeaways from Goldman’s Q1 earnings announcement that you may have missed:
- It was a bad quarter for traders. Overall, trading revenue dropped 37% compared to a year earlier. Debt, currency and commodities trading revenues sank 47%, while equity trading went down 23% year-on-year.
- Goldman's IBD struggled. Its first-quarter investment-banking revenue dipped 23% from a year ago. Fewer M&A transactions led to a 20% drop in financial advisory revenues year-over-year, while underwriting revenue from was also down 27%.
- Headcount is zigzagging. Headcount went from 34,400 in Q1 of 2015 to 36,800 employees at the end of 2015 back down slightly to 36,500 at the end of the most recent quarter.
- The equity securities business cratered. A year ago this drove $1.16bn in net revenue, while last quarter it generated close to $1bn. Goldman divulged that the unit’s revenue took a 100% nosedive – to zero – in Q1 of this year due to the lackluster performance of energy-related public equity securities. Revenues from the investing & lending division, of which equity securities is a part, went down 95% year-over-year.
- What a difference a year makes. At this time last year, Goldman was riding high as trading revenue from bonds, foreign exchange and commodities rose 10% and from equities trading revenue soared 46%. In contrast, Goldman’s Q1 this year was the worst first three months of the year since Lloyd Blankfein took over for Henry Paulson as chairman/CEO a decade ago.
Goldman's CFO, Harvey Schwartz, said they are “open-minded” and willing to explore alternative ways to drive revenue like acquisitions.
Meanwhile, Bloomberg released its annual ranking of the best undergraduate business programs in the U.S., and not a single Ivy League university was able to crack the top 10, although Cornell’s Dyson came as close as you possibly can, finishing 11th on the list.
Villanova surged to the top of the ranking, followed by Notre Dame’s Mendoza in second, Boston College’s Carroll in third place, Indiana University’s Kelley in the fourth position and the University of Virginia’s McIntire in fifth.
Meanwhile:
Nomura's equities team thought there was only a 25% of full shut-down in equities (Euromoney)
Barclays' head of foreign exchange for corporate clients, Gareth Noble, has left the bank. (Business Insider)
J.P. Morgan and the boutique bank M. Klein & Co. are advising Saudi Arabia on the initial public offering of Saudi Aramco, which could become the world's largest publicly traded company. (Business Insider)
The “Mad Punter” is on trial for allegedly making £7.4m ($10.6m). His lawyer told the jury they must repress the envy they likely feel about his extravagant wealth, because this isn’t a popularity contest, after all. (Bloomberg)
Wells Fargo hired Kristi Mitchem to run its asset management division, overseeing a business that manages $480bn in client assets. (Reuters)
Citi's co-head of equities for Australia, Angus Richardson, is headed to Hong Kong to take a regional role as head of the bank's cash sales team. (Financial Review)
Fintech 'frenemies' - both start-ups and traditional banks profit. (Credit Suisse)
An increasing number of old-economy companies, including General Mills, 7-Eleven and the Campbell Soup Co. have joined a crowd of technology companies to create venture capital funds. (New York Times)
European MBA programs are getting cheaper, plus you can finish in just one year. (Quartz)
Sometimes lies are allowed in a business deal. (New York Times)
As an intern, you shouldn’t expect to serve tea and coffee to senior executives – you should focus on standing out from the crowd if you want to land a graduate job. (Learning to Leap)
'How can I get ahead at work without being promoted?' (Telegraph)
