Regulators and rivals conspired to take a chunk out of Goldman Sachs profits in the first three months of this year.
The investment bank that everybody loves to hate recorded a 21 per cent fall in underlying profits, as trading revenues slumped from their bumper quarter at the start of 2010. The year before, rival banks had been too timid or cash-strapped to mount a challenge, and Congress had yet to pass new laws curbing proprietary trading and derivatives businesses.
Goldman recorded net earnings of $2.7bn for the three months to the end of March, a bottom-line figure depressed by the payment of $1.64bn in dividends when it repaid money it had borrowed from billionaire Warren Buffett at the height of the 2008 financial panic.
In its important fixed income, currencies and commodities trading division, revenues slumped 28 per cent to $4.3bn, though improvements in investment banking advisory fees and asset management work helped offset some of the decline, the bank said.
David Viniar, Goldman's chief financial officer, said that the bank's clients had become more cautious and that its market share in trading had fallen, to what he called a "more normalised" level. Clients are still worried about the economic and regulatory environment, he said, and Goldman itself still characterises the climate as uncertain. The repayment of Mr Buffett came after the Federal Reserve ended curbs on major banks returning money to shareholders last month.
Goldman put its compensation costs at $5.2bn for the first quarter, adding together salaries and benefits paid already and money set aside for year-end bonuses. That figure is down 5 per cent from the same period last year. With a total employee count of 35,400, that works out to about $148,000 per employee so far this year.
The equivalent figure this time last year was $166,000, and Goldman bankers went on to earn an average $430,700 in 2010.
Lloyd Blankfein, chief executive, declared himself pleased with the quarter's results and sounded an optimistic note for the immediate future. "Looking ahead, we continue to see encouraging indications for economic activity globally."