The CEO of Goldman Sachs, a major Wall Street firm, expects its third quarter results to be impacted next month.
Goldman Sachs CEO David Solomon stated at a financial conference held at Barclays on Monday (September 9) that the bank's trading business in the third quarter is expected to decline by 10% year-on-year, with fixed income business experiencing the largest decline. In addition, the company's continuously divested consumer business will also suffer a pre tax decline of $400 million.
Trading business is not favored
Solomon stated at the meeting that due to the more challenging macro environment and the difficult trading environment in the fixed income market in August, the bank's trading business is trending towards a decline of nearly 10% in the third quarter, while analysts originally expected Goldman Sachs' trading business to decline by 6.6% in that quarter.
It is worth noting that in Goldman Sachs' second quarter financial report released in mid July, the trading department's revenue exceeded expectations, driving a 150% increase in the bank's Q2 profits. In the second quarter, both fixed income and stock trading businesses showed excellent performance, and the rebound of capital market business also helped the company achieve good quarterly results.
Apart from the lackluster trading performance in the third quarter, Goldman Sachs' consumer business has also had a tumultuous journey in recent years. At the end of 2022, Goldman Sachs decided to gradually withdraw from its fledgling consumer retail business and began a series of write downs related to the sale of large businesses, such as divesting General Motors' credit card business and selling loan portfolios to small and medium-sized enterprises.
According to informed sources in April, General Motors is in negotiations with Barclays on a credit card partnership agreement to replace Goldman Sachs.
Solomon pointed out that "these factors combined may have a pre tax impact of approximately $400 million this quarter, mainly reflected in revenue
Currently, Goldman Sachs is focusing on its asset and wealth management business, hoping to use this to help drive growth. Solomon also expressed confidence in investment banking, believing that it will continue to improve and hoping that private equity led transactions will rebound by the end of this year or 2025. However, he did not make a forecast for investment banking revenue in the third quarter.
After Solomon's speech, Goldman Sachs' stock price fell slightly by 0.01% after hours on Monday (September 9th). So far this year, driven by the recovery of major investment banking businesses, the stock has risen by over 25% cumulatively.