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Goldman Sachs’ pay falls by a third and profits fall after the end of the investment boom | Goldman Sachs

Goldman Sachs bankers saw their wages and benefits fall by nearly a third in the first quarter as the end of the investment banking boom helped halve profits.

The Wall Street lender said it had set aside nearly $ 4.1 billion (£ 3 billion) to cover staff compensation costs in the first three months of the year – an average of $ 91,116 for each of the world’s roughly 43,900 employees. .

The payroll, which covers salaries, pensions and benefits, as well as the best estimate of the bonuses Goldman intends to pay at the end of the year, fell 32 percent from $ 6 billion a year earlier.

Bankers’ bonuses are expected to decline this year as the investment banking boom caused by the gradual easing of measures to block Covid last year begins to decline. This comes as fewer companies raise money in financial markets and refrain from mergers and acquisitions, which together helped boost investment banking fees and bank profits to record highs in 2021.

Investment banks have seen a drop in demand this year following Russia’s invasion of Ukraine, which shook global markets and forced companies to be more cautious in launching deals and raising funds.

“It was a turbulent neighborhood dominated by the devastating invasion of Ukraine,” said David Solomon, Goldman’s chief executive. “The fast-growing market environment has had a significant effect on customer activity,” he added.

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It contributed to a 42% drop in first-quarter earnings to nearly $ 4 billion, down from $ 6.8 billion a year earlier. Revenue fell 27% to just under $ 13 billion due to “significantly lower” revenues from asset management and investment banking.

The bank was also affected by the increase in loan loss provisions, setting aside $ 561 million to cover potential credit card defaults and the impact of the war in Ukraine. This compares to the $ 70 million release last year, when banks realized they had set aside too much money to mitigate the impact of potential defaults related to the Covid crisis.

Separately, Citigroup reported a 46 percent drop in first-quarter profits to $ 4.3 billion, and said the current economic environment has also affected investment banking earnings.