Goldman Sachs saw profit plummet 33% within the the third quarter because the bank faces ongoing losses from selling off chunks of its consumer lending business and worse than expected revenue from its asset and wealth management division.
The Wall Street giant’s profits were buoyed by strong revenue from its trading business, which helped the bank — helmed by Chief Executive David Solomon — beat analyst expectations, the bank said Tuesday.
The third quarter profit was $2.1 billion or $5.47 per share — barely ahead of the $5.42 per share analysts predicted, in accordance with data from FactSet. Revenue dropped to $11.8 billion — declining 1% yr over yr and beating expectations.
It’s the eighth straight quarter the bank has seen a year-over-year profit decline. Shares of Goldman traded roughly 1% lower around $309 per share.
In comparison with its peers, Goldman’s success is tied closely to its banking and trading business meaning a slowdown in deal making and a down market have an out of doors impact on the bank.
As compared, JPMorgan — which has a thriving consumer business and wealth management arm — saw a 35% increase in profits yr over yr.
Following the report, Solomon said he’s confident the bank is moving in the correct direction and that the difficult market conditions will soon clear up.
David Solomon signaled the market will improve in the approaching months.REUTERS
“We proceed to make significant progress executing on our strategic priorities and we’re confident that the work we’re doing now provides us a much stronger platform for 2024.”
“I also expect a continued recovery in each capital markets and strategic activity if conditions remain conducive. Because the leader in M&A advisory and equity underwriting, a resurgence in activity will undoubtedly be a tailwind for Goldman Sachs.”
While Goldman has tried to construct out its consumer business in recent times, it’s needed to largely scrap those efforts — last week it announced it was selling off its fintech acquisition Greensky at a loss.
The bank has re-focused its efforts on constructing out its asset and wealth management group — and in a positive sign for the division, AWM collected a record amount of fees this quarter.
