(Bloomberg) -- Goldman Sachs Group Inc. will probably see compensation costs climb by a percentage in the low-to-mid single digits even with the bank set to post another year of slumping profit.
The Wall Street giant will continue to pay based on the performance of its businesses, in a year in which trading held its ground and other pockets of the firm were hit by a slowdown, Chief Financial Officer Denis Coleman said at the bank’s financials conference Tuesday. Adjusted net income is expected to decline this year by about 25%, according to analysts surveyed by Bloomberg.
Goldman’s top leaders have focused more attention on the bonus pool after saying last year’s pay slump contributed to public sniping that was targeted at Chief Executive Officer David Solomon. This year’s pay decisions also signal a more measured move after two consecutive years of wild swings in compensation.
Compensation costs were $15.1 billion in 2022. In the third quarter of this year, Goldman Sachs boosted the portion of revenue it pays out to workers, increasing the closely watched ratio to 34.5%.
Shares of the company, which are virtually unchanged this year, fell 1.9% to $242.65 at 1:38 p.m. in New York.
At the conference, Coleman said the expected increase in compensation costs would be a percentage in the low single digits. A spokeswoman later clarified that he intended to say “low to mid single digits.”
Top management has been spearheading a fresh strategy pivot, asking investors to be patient as it unwinds a failed attempt to expand in consumer banking. The firm is offering a more focused vision built around the money-management business and the investment bank, which houses the trading and dealmaking operations.
Coleman estimated that fourth-quarter trading revenue will be flat relative to a year earlier. While the CFO said dealmaking fees have been muted, he’s forecasting a more hopeful outlook for 2024. The bank is predicting another hit in its real estate portfolio — mostly investments in which it has majority control — but expects it to be lower than last quarter’s markdown.
The CFO also disclosed a $525 million charge representing Goldman’s share of the special assessment levied by the FDIC to replenish the deposit insurance fund, a higher figure than what it had previously estimated.
(Updates with company’s clarification of CFO remarks starting in first paragraph.)
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