After last quarter’s brutal results, which saw the worst revenue for Goldman Sachs since Q4 2011, the question about Goldman’s Q2 earnings report was not if it would beat but by how much. Moments ago we got the answer when the company reported Q2 EPS of $3.72, handily beating consensus estimates of $2.68. The reason for the rebound was stronger top-line growth which at $7.93 billion, was the strongest print in one year, if still down 12.5% from a year ago.
The top-line rebound was not uniform however, with revenues from Equities declining once again, down to $1.754 billion from last quarter’s 1.789 billion, while Investment management was roughly flat, at $1.353 billion. The upside surprise came from investment banking which rose from $1.46 billion to $1.79 billion, as well as FICC, which at $1.93 billion was above the consensus estimate of $1.8 billion, and higher than both Q1 2016 ($1.66BN) and the year-prior print of $1.6 billion. The final wildcard, Goldman’s prop trading group, Investing and Lending, surged to $1.1 billion from just $87 million last quarter if down substantially from the $1.8 billion a year ago.
But while the revenue side was stronger than expected, if still double-digits lower than a year ago, what was perhaps more interesting was the slashing of overhead. According to Goldman, in Q2 it had only 34,800 full time employees, a whopping – for the bank – cut of 1,700 from 36,500 a quarter ago, the biggest monthly drop in employment since the crisis.
Finally, confirming Goldman’s dedication to cost-cutting was the flattish compensation expense, which at $3.3 billion in the quarter, meant that Goldman’s LTM comp provision was $10.4 billion, which as the chart below shows, means that the average employee comp remained flat at the worst level this decade, at just under $300,000. per worker.
via http://ift.tt/29LBig1 Tyler Durden