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The Wall Street giant’s net profit slumped 33% to $2.06 billion, or $5.47 per share, it said on Tuesday. Analysts on average had expected a profit of $5.31 per share, according to LSEG data.
Shares of the bank were marginally up in volatile premarket trading.
“I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive,” CEO Solomon said in a statement.
Goldman was an underwriter for high-profile initial public offerings (IPO) in September, including SoftBank (TYO:9984) Group’s chip designer Arm Holdings (NASDAQ:ARM) and grocery delivery app Instacart (NASDAQ:CART).
The share sales sparked optimism about a recovery in IPO market, but poor performance after debuts and the lukewarm reception to Germany’s sandal maker Birkenstock have raised doubts.
Goldman’s investment banking fees of $1.55 billion was largely unchanged from last year as debt underwriting activity resumed and the market for initial public offerings picked up.
CONSUMER BANKING WEAKNESS LINGERS
Goldman’s ill-fated foray into consumer banking, which has lost $3 billion over three years, continued to weigh.
The bank took a $506 million writedown on GreenSky, which facilitates home improvement loans for consumers and was sold to a consortium of investment firms led by Sixth Street Partners.
It was bought for $1.7 billion last year although it was valued at $2.2 billion when the deal was first announced in 2021. Goldman had taken a charge of $504 million on GreenSky in the second quarter.
Real estate investments were another drag on earnings as the bank booked an impairment charge of $358 million compared with $485 million in the second quarter.
That weighed on revenue from its asset and wealth management unit, which slipped 20% to $3.23 billion.
Solomon has shifted the firm’s focus back to its traditional strengths – investment banking and trading, and aims to grow in asset and wealth management.
“The work we’re doing now provides us a much stronger platform for 2024,” Solomon said.
Investment banking results have been mixed for peers, with JPMorgan Chase (NYSE:JPM) reporting a 6% decline in revenue, while Citigroup (NYSE:C) said fees jumped 34%. Morgan Stanley is set to report its earnings on Wednesday.
The U.S. Federal Reserve may raise interest rates one more time this year, while several bank executives have said they expected borrowing costs to stay higher for longer.
