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Things aren't going so well in Asia this year.

Goldman Sachs' Asian business has slumped to a three-year low

Goldman Sachs has revealed the extent of the slump in its Asia-Pacific operations after cutting jobs in Hong Kong last month.

Goldman’s revenues in APAC fell by more than a third to $1.3bn during the third quarter, and by 28% during the first nine months of the year on the back of a strong 2021. This was Goldman’s worst third quarter performance in Asia since 2019.

Goldman fared worse than rival Morgan Stanley, whose APAC revenues fell by 14% during the third quarter and by 10% in the first nine months. CEO James Gorman said that the bank cut risk by pulling in its Asia margin book. Neither Goldman nor Morgan Stanley provided a breakdown of their revenues by division.

Citi provided more detail on its performance, with revenues in its APAC institutional securities group, which includes corporate finance, sales and trading, transaction banking and securities services, flat during the first nine months of 2022 compared with a year ago, while revenues fell just 3% during the third quarter. Speaking on the bank’s earnings call, CEO Jane Fraser said: “In Asia, we continue to be concerned with China's COVID lockdowns, which took a bigger bite out of economic activity than I anticipated, exacerbated by a lack of intensified macro stimulus.”

The slump in Goldman’s performance explains why the bank has moved first to cut jobs in the region, with 30 staff in its China investment banking division leaving as part of a redundancy program.  The cuts came after the bank hired aggressively last year.

Bank of America does not break down its revenues by region but said an overall 4% drop in equities revenue was driven by lower client activity in Asia.

 

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AUTHORDavid Rothnie Insider Comment
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