The Review — 11/02/2015 at 14:17

Goldman Sachs Gives Breakdown of Fixed-Income Trading Revenue

Goldman Sachs Group Inc. provided a rare look into the performance of the units that make up fixed-income trading, the firm’s largest source of revenue.

Interest-rate products generated about $14 billion, or 29 percent of fixed-income revenue, in the past five years, the New York-based bank said in a presentation on its website. Chief Executive Officer Lloyd C. Blankfein is speaking to investors at a Credit Suisse Group AG event in Florida, his first presentation at an investor conference in more than a year.

Goldman Sachs typically has only provided its total revenue from fixed-income trading, which produced a Wall Street record $21.9 billion in 2009 and declined to $8.46 billion last year. Goldman Sachs has cut compensation costs and relied more on investment banking and asset management to combat the decline, and the bank said in the presentation it can boost revenue as competitors exit businesses and clients pay more for liquidity.

Credit trading followed interest rates, producing 25 percent of fixed-income revenue. Mortgages and currencies trading each generated about 16 percent of revenue, while commodities accounted for about 14 percent, the firm said.

The presentation highlighted the lack of reliance on one area of trading and said Goldman Sachs’s business mix and flexible costs allowed it to produce less than half the earnings volatility of its closest rivals.

Commodities revenue, which averaged about $1.4 billion per year over the past five years, is less than half what the firm produced before the financial crisis. Goldman Sachs generated more than $3 billion in commodities revenue in each of 2007 and 2006, according to an internal presentation that was later released as part of a Senate investigation.

Goldman Sachs also provided more detail on its loan book, which has doubled in the last two years to $47 billion. Fifty-one percent of the book is corporate loans, while loans to private-wealth-management clients comprise 34 percent, according to the presentation.

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