A decade ago, Goldman Sachs reported that its return on common shareholder equity had hit a dazzling 39.8 per cent. It symbolised a gilded age: back in 2006, as markets boomed, the power — and profits — of big banks seemed unstoppable.
How times change. This week, American banks unveiled downbeat results, with revenues for the biggest five tumbling 16 per cent year-on-year. But Goldman was even weaker: net income was 56 per cent lower, while return on equity, a key measure of profitability, was 6.4 per cent, below even the sector average in 2015 of 10.3 per cent.
A bank which was once so adept at sucking out profits that it was called a “vampire squid” (by Rolling Stone magazine) is thus producing returns more commonly associated with a utility. The phrase “flattened slug” might seem appropriate.