Goldman Sachs raises bankers’ salaries, bonuses after quarterly profit soars 150% | Goldman Sachs

Goldman Sachs raised bankers’ pay, including bonuses, by 17% after profits more than doubled in the second quarter on a rebound in trading.

The Wall Street firm said it spent $4.2bn (£3.2bn) on compensation and benefits for its 45,300 employees in the three months to June, almost a fifth more than in the same period last year. That figure includes salaries and pensions, as well as the amount set aside for individual bonuses that are distributed at the end of the financial year.

In total, Goldman has spent $8.8 billion on employee compensation and benefits since January, which the bank said reflected “improved operating performance.” Financial filings show that Goldman’s profit jumped 150% to $3 billion in the second quarter, from $1.2 billion a year earlier.

Profits were boosted by a surge in corporate deals as investment bankers helped companies navigate a new wave of mergers and acquisitions. That included ExxonMobil’s $60 billion takeover of Pioneer Natural Resources in May, for which Goldman acted as broker alongside rival banks Morgan Stanley and Citigroup.

David Solomon, Goldman’s Chairman and CEO, said: “We are pleased with our strong second quarter results and our overall performance in the first half of the year, which reflected strong year-over-year growth in Global Banking and Markets and Asset and Wealth Management.”

Investment banks are emerging from a two-year period of stagnation marked by high interest rates and economic uncertainty. An improving economic outlook and expectations of interest rate cuts by the Bank of England and the US Federal Reserve have boosted demand for services from banks such as Goldman Sachs.

This will likely translate into bigger bonuses, particularly for Goldman’s 6,000 UK employees, who will no longer be bound by a bank bonus cap that previously limited bonuses to twice an individual’s salary.

The UK bonus cap was originally part of changes introduced after the 2007-08 banking crisis and was intended to end a bonus culture that was accused of prioritising short-term profits over long-term stability. Before Labour won the general election, incoming Chancellor Rachel Reeves said the party had no plans to reinstate the cap on bankers’ bonuses.

Richard Gnodde, the chief executive of Goldman Sachs International, announced in May that the bank would change its compensation structure, giving hundreds of its highest-paid employees the chance to earn 25 times their salary in bonuses.