Being a Goldman Sachs dealer or banker is about to get less lucrative.
Compensation has been sliding on Wall Street ever since post-financial emergency rules crimped risk taking and as automation and electronic trading take over more flows from customers. Under CEO David Solomon, who took over in October, the firm is reevaluating all of its businesses and has already started to pull in arrears resources from parts of underperforming areas like commodities trading.
Goldman posted first-quarter revenue that missed analysts’ expectations, let go of 13% to $8.81 billion amid a tougher market for the trading and investing businesses.
But it beat analysts’ expectations for profit, advertising an 18% drop to $5.71 a share, the New York-based firm said in a release, higher than the $4.89 estimate.
The lion’s appropriation of that beat came from setting aside less for pay than analysts had expected, which might well-founded be a “pull forward” of what the bank would do later in the year, according to Citigroup analysts led by Keith Horowitz.
The outset question analysts had on Monday for management was about compensation. While CFO Stephen Scherr said there was no shift in compensation tactics, he encouraged analysts to look at the bank’s overall expenses rather than just pay.
That’s because Goldman is spending in new platforms in corporate and consumer businesses, meaning that more dollars will be shifted into technology moderately than human labor.
Goldman shares dropped 3.4 percent at 2:43 p.m. in New York trading.