Goldman Sachs pay falls by a third and profits slump as investment boom ends

Wall Street lenders feel the pinch from Ukraine war and growth fuelled by easing of Covid restrictions wanes

Goldman Sachs bankers saw their pay and benefits fall by nearly a third in the first quarter, as the end of the investment banking boom contributed to a near halving of profits.

The Wall Street lender said it had put aside nearly $4.1bn (£3bn) to cover the costs of compensating staff over the first three months of the year – an average of $91,116 each for its approximately 43,900 global employees.

The pay pot, which covers salaries, pensions and benefits as well as the best estimate of bonuses that Goldman intends to pay at the end of the year, was down 32% from $6bn a year earlier.

Banker bonuses are expected to fall this year as the investment banking boom, sparked by the gradual easing of Covid lockdown measures last year, starts to wane. It comes as fewer firms raise money on the financial markets and hold back from mergers and takeovers, which together helped push investment banking fees and bank profits to record highs throughout 2021.

Investment banks have experienced a drop in demand this year after Russia’s invasion of Ukraine, which rattled global markets and made companies more cautious about launching deals and fundraising.

“It was a turbulent quarter dominated by the devastating invasion of Ukraine,” said David Solomon, Goldman’s chief executive. “The rapidly evolving market environment had a significant effect on client activity,” he added.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

It contributed to a 42% drop in profits in the first quarter to nearly $4bn, down from $6.8bn a year earlier. Revenues tumbled 27% to just under $13bn due to “significantly lower” income from its asset management and investment banking divisions.

The bank was also hit by an increase in loan loss provisions, having put aside $561m to cover potential defaults linked to a surge in credit card customers, as well as the impact of the war in Ukraine. That is compared with the release of $70m last year as banks realised they had put aside too much cash to cushion the blow of potential defaults linked to the Covid crisis.

Separately, Citigroup reported a 46% drop in first-quarter profits to $4.3bn, and said the current economic environment had also affected its investment banking income.


Kalyeena Makortoff

The GuardianTramp

Related Content

Article image
Goldman Sachs and Deutsche Bank shareholders revolt against pay deals
Third of investors reject US bank’s pay plans, while German bank’s shareholders vote against a new pay scheme

Julia Kollewe and Rob Davies

20, May, 2016 @4:04 PM

Article image
Goldman Sachs cuts bankers’ bonus pot by 20% as profits fall
Firm announces $798m reduction in amount set aside for benefits and salaries

Kalyeena Makortoff Banking correspondent

15, Apr, 2019 @6:05 PM

Article image
Bumper pay rises for Goldman Sachs bosses as profits slump 38%
Goldman Sachs' UK chief Michael Sherwood's reward this year represents a 60% increase on the value of the share award he received in 2009

Richard Wachman

30, Jan, 2011 @5:19 PM

Article image
Goldman Sachs pay and bonuses rise to £250,000 each
Bank has set aside $13bn to cover the salaries, bonuses and perks for staff worldwide – a rise of more than $30,000 a head on 2011

Jill Treanor

16, Jan, 2013 @2:08 PM

Article image
Goldman Sachs backs down from delayed bonus tax plan
Bank scraps scheme which would have allowed top staff to avoid 50% rate after pressure from Mervyn King and government

Jill Treanor

15, Jan, 2013 @7:11 PM

Article image
Goldman Sachs reveals plunging Wall Street profits
Wall Street bank contributed $600m (£395m) to Alistair Darling's one-off bonus tax and revealed that its wage and bonus bill reached $9.2bn in the first half of the year

Jill Treanor

20, Jul, 2010 @4:56 PM

Article image
Goldman Sachs considers shifting bonuses to benefit from tax rate cut
Payment of bonuses in April – when top rate falls to 45% – would save employees thousands of pounds

Jill Treanor, City editor

14, Jan, 2013 @12:10 AM

Article image
Brexit will 'stall' City, says Goldman Sachs chief
Lloyd Blankfein, whose bank employs more than 6,000 in London, says it has ‘contingency plans’ to move staff out of UK

Mark Sweney

05, May, 2017 @7:01 AM

Article image
Goldman Sachs boosts post-Brexit plans with Frankfurt office deal
Wall Street bank leases eight floors of new 37-storey block in German financial capital with space for 1,000 staff

Jill Treanor

05, Oct, 2017 @6:27 PM

Article image
EU staff petition attacks Barroso over Goldman Sachs job
More than 75,000 people sign petition denouncing former president of European commission and calling for him to lose his EU pension

Jennifer Rankin in Brussels

29, Aug, 2016 @12:00 PM