to justify the expense if revenues aren’t there,” Morgan added.
Oppenheimer analyst Chris Kotowski called Goldman a “textbook example” of how banks can boost profitability even in a difficult business environment by cutting employee pay. “It is simply not an option for bank managements to earn non-competitive returns in the long run,” he said.
Goldman’s return on equity for the quarter — a measure of how well the bank turns shareholder funds into profit — was 16.5%, nearly triple its level in the same quarter a year earlier.
There are some sceptics who say it is too early to declare the arrival of a new era when it comes to Wall Street pay. After all, they point out, banks are only taking drastic steps after punishing investors with weak returns for the past few years.