Goldman’s Asian bankers enjoy record quarter. Citi’s Asian revenues inch up
Back in April, we wondered whether Goldman Sachs could sustain its strong performance in Asia, following a 33% surge in Q1 revenues. Now Goldman’s second quarter results reveal that its Asian momentum is continuing apace: the US bank has just registered its best quarterly figures for Asia since it started to break out numbers by geography in Q3 2017.
Revenues in Asia were $1,553m in Q2 – that’s a 38% increase from a year ago, and is a 6% quarter-on-quarter rise. Goldman’s earnings report did not elaborate on the drivers of its Asian performance. Globally, the firm had a stellar quarter: revenues soared 149% year-on-year in fixed income trading, and 46% in equities trading. In ECM, the jump was 122%.
Don’t get too excited if you work for Goldman in Asia, however, because your importance within the firm as a whole has not necessarily increased in recent months. Asia contributed 12% to GS revenue in the three months to end-June, which is the same percentage as Q2 2019 and is down on the 17% share the region achieved in the opening quarter of this year.
As shown in the chart below, Citi’s Asian Q2 revenues of $4,098m were much larger than Goldman’s, but they only increased 2% year-on-year. Asia was also a more significant revenue contributor (20.7%) at Citi last quarter than it was at Goldman.
However, some parts of Citi performed better than others. In Global Consumer Banking, Asian revenues of $1,547m declined 16% year-on-year, “on lower card purchase sales and lower deposit spreads”, according to Citi’s Q2 financial report. “We’re seeing a disproportionate impact on Asia card revenues from lower travel spend in the region,” Citi chief financial officer Mark Mason said during the bank’s results presentation.
If you work in Citi’s other division in Asia, Institutional Clients Group (ICG), you just experienced a better second quarter – revenues were up 18% to $2,551m. Citi did not explain the Asian rise in ICG, but globally it was down to a “strong performance in fixed income markets, investment banking, and the private bank”.
ICG comprises corporate and investment banking, treasury and trade solutions, markets and securities services, and private banking – and it therefore competes in similar sectors to Goldman. However, this one Citi division alone still dwarfs Goldman’s entire Asian operations in terms of Q2 revenue ($2,551m vs $1,553m).