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Pay and bonus pot boosted as earnings surge for Goldman Sachs

Published 18/10/2016

Goldman has around 6,500 staff in the UK (AP)
Goldman has around 6,500 staff in the UK (AP)

Wall Street giant Goldman Sachs revealed a 36% hike in pay and bonuses set aside for staff as it joined rivals in posting a surge in third quarter earnings.

The US investment bank said it put by 3.2 billion US dollars (£2.6 billion) for pay, benefits and bonuses for its 34,900 staff worldwide after delivering a 19% rise in net revenues to 8.2 billion US dollars (£6.7 billion) in the three months to September 30.

Goldman, which has around 6,500 staff in the UK, said net earnings leapt 58% higher to 2.1 billion US dollars (£1.7 billion) in the quarter, driven by a jump in trading revenues.

It marked the second straight quarter of profits growth after a year of declining earnings.

Investment banks have been boosted by buoyant trading in fixed income, currencies and commodities since the UK's vote to quit the European Union.

Volatility has been heightened since the Brexit vote sent the pound plunging, while markets have also tried to second guess when the Federal Reserve will deliver the next hike in US interest rates.

Goldman's profits rise also came as it trimmed costs, cutting its workforce by 1,900 staff, or 5%, so far in 2016.

It said costs, excluding the pay and bonuses bill, fell by 15% year-on-year in the quarter.

Lloyd Blankfein, chairman and chief executive of Goldman, said: " We saw solid performance across the franchise that helped counter typical seasonal weakness."

"We continue to manage our balance sheet conservatively," he added.

The group's net revenues across its fixed income, currencies and commodities arm surged by 34% to 1.96 billion US dollars (£1.6 billion) in the third quarter.

Goldman said this performance came against a backdrop of "low interest rates and slow global economic growth".

Its pay as a ratio of net revenues rose to 42% in the third quarter.

The group's US banking rivals have posted similarly upbeat results thanks to booming fixed income trading, with JP Morgan Chase seeing revenues rise 48% in the division, while Citigroup and Bank of America also notched up growth of more than a third in their fixed income revenues.

Press Association

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