US lender Goldman Sachs reported a plunge in profits and slashed bankers paypackets in the first quarter of the year as the post pandemic dealmaking boom finally faltered.
Profits at the lender slumped 43 per cent in the first three months of the year to $3.83bn, or $10.76 per share, as revenues fell 27 per cent to $12.93bn.
Analysts had predicted a bigger fall however, with a consensus estimate of $8.89 per share, according to Refinitiv data.
The bank said the dip had been driven in part by “significantly lower” income from its investment banking division as a post-pandemic dealmaking boom seen in 2021 came to an end.
Investment banking revenue dropped 36 per cent to $2.41bn, as fees from advising on stock market listings and debt underwriting dried up.
Goldman boss David Solomon said it had been a “turbulent quarter” sparked by Russia’s invasion of Ukraine.
“The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill,” Solomon said.
The turbulence sparked an uplift in the trading division however, with the bank’s global markets segment reporting net revenue of $7.8bn, a 4 per cent jump on last year.
Consumer and wealth management also recorded a 21 per cent jump in net revenues to $2.1bn, helped by higher management fees and credit card balances.
But bankers felt the hit of the slowdown as the bank slashed pay packets by nearly a third. Nearly $4.1bn was set aside to cover staff compensation over the first three months of the year, down 32 per cent from $6bn a year earlier.