The Goldman Sachs & JPMorgan traders having a bad year
It looks like a great time to be an investment banker at Goldman Sachs, but the same can't be said for employees elsewhere at the firm, or for rivals at JPMorgan.
As we reported earlier today, Goldman has hiked spending on compensation by 47% to $11.3bn in the first half, while keeping headcount roughly stable. Goldman's investment bankers, who are having a record year, are likely to be the main beneficiaries. At JPMorgan's corporate and investment bank, by comparison, spending on compensation was up only 13% in the first half of the year, and the bank said explicitly that performance related compensation accruals (bonuses) in the past quarter were less than in 2020.
As the charts below show, however (hover for figures), not everyone at Goldman and JPMorgan has shared in this year's gains. Fixed income currencies and commodities (FICC) sales and trading revenues were down at both banks in the first half, and the pace of the decline accelerated in the second quarter. At Goldman Sachs, equities sales and trading and debt capital markets revenues also waned in Q2.
Goldman is pretty specific on the causes of this pain. After a record 2020, the firm said today that revenues were "significantly lower" across interest rate products, credit products and commodities and "lower" in mortgages and currencies. Similarly, it said revenues were "significantly lower" in cash equities and "lower" in equity derivatives. Prime financing, however, did ok.
The discrepancy in performance between Goldman and JPMorgan's equities traders in the second quarter is notable. While Goldman's equities traders were struggling, JPMorgan credited its equities traders with a "strong" performance over the same period.
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