Goldman Sachs’ London operation has seen pre-tax profits slump 60 per cent to $335m (£216m) in the first six months of the year.
The main reason for the fall in profits was Goldman’s rising share price, which meant future bonus awards to staff have soared in value, but revenues have dropped in fixed income, investing and lending due to “higher asset prices”. Group turnover at Goldman Sachs International (GSI), which covers Europe, the Middle East and Africa, fell 5.4 per cent to $3bn.
The half-year accounts said investment banking revenues rose due to increased debt and equity underwriting. GSI worked on several big deals, including Vodafone’s £6bn acquisition of Germany’s Kabel Deutschland and the £750m flotation of estate agency Countrywide and conditions “generally improved” in the second quarter in the UK and eurozone.
However, GSI warned of “concerns about the US Federal Reserve potentially tapering its bond-buying programme earlier than anticipated”.
Expenses leapt by $309m to $2.5bn, which includes pay and bonuses for 5,700 employees. Stripping out the impact of share awards, known as mark-to-market equity-based compensation, profits fell only 13 per cent to $851m.
GSI’s performance contrasts with the American parent company, which reported a 31 per cent rise in profit to $6bn, with revenues up 13 per cent to $18.7bn.