JPM, Goldman Sachs: The banks making the most of a bad time
Things aren’t great in banking – but they’re not as bad everywhere.
Data from Tricumen, the market intelligence firm, suggests that despite poor revenues, not all banks were suffering equally from a slow start to 2023.
JPMorgan, Goldman Sachs, and Morgan Stanley are doing ok. Operating revenue per full time employee – a measure of individual productivity – suggests that all three banks are significantly above their peer group in capital markets. The dotted, circular line on each chart below indicates the average performance across the peer group average. Anything inside is worse than average; anything outside is better.
Capital markets is defined as all investment banking activity. That includes the banking category (which includes both M&A and debt/equity capital markets), as well as fixed income, currencies, and commodities (FICC) and equities trading.
In capital markets generally, as well as FICC and equities trading specifically, it was Goldman’s bankers and traders that produced the highest revenues per head, on average. In banking, only Wells Fargo was more efficient, whilst Bank of America and Morgan Stanley were on par.
A big part of Goldman’s new efficiency might be the job cuts the bank began towards the end of last year. Morgan Stanley might gain some of the same benefit, owing to the job cuts program it began implementing earlier this week. JPMorgan, notably, has not announced major cuts in the investment bank.
Not all banks are going down the job cut route – Bank of America, for instance, instituted a hiring freeze – but proven productivity results at rivals who did cut jobs might leave options on the table. And hey, work your socks off. Because if they’re going to cut jobs… Well, the least you can do is make sure it’s not you being cut.
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