Goldman Sachs
‘ third-quarter earnings topped expectations as the bank is in the midst of a retreat from its consumer banking businesses.
Profit at the bank slid 33% to $2.1 billion, or $5.47 a share, on revenue of $11.8 billion as the bank continues to contend with improving, but still historically weaker capital markets activity. Analysts surveyed by FactSet had expected the bank would earn $5.42 a share on revenue of $11.2 billion.
“We continue 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,” David Solomon, chief executive at Goldman Sachs, said Tuesday.
Solomon is looking toward the gradual recovery in capital markets activity for further gains for Goldman. Aside from a handful of initial public offerings—
Arm Holdings
(ticker: ARM) and
Instacart
(CART) are two big ones—over the past few months, capital markets activity has been low and investment banking revenue — standing at $1.6 billion — was little changed from the year-ago quarter.
“As the leader in M&A advisory and equity underwriting, a resurgence in activity will undoubtedly be a tailwind for Goldman Sachs,” Solomon said.
Trading was mixed with fixed income sliding 6%, while equities trading revenue was 8% higher than during last year’s third quarter.
With deal-making and trading off sharply from the booming times of 2021, Wall Street will instead be focused on more strategic issues, such as the bank’s retreat from its costly foray into consumer banking.
Last week, Goldman announced it had sold lending platform GreenSky to a consortium of institutional investors led by Sixth Street. The bank completed its GreenSky acquisition only last year to the tune of $1.7 billion; the sale to Sixth Street will translate to a loss, which the bank said last week lowered third-quarter earnings by 19 cents a share.
“This transaction demonstrates our continued progress in narrowing the focus of our consumer business,” Solomon said last week, noting the sale would allow the bank to focus on its strengths in investment banking and wealth management. “While GreenSky is an attractive business, we are focused on advancing the strategy we laid out for our two core franchises.”
The sale comes as Goldman has pulled back on other consumer-focused endeavors. In August, the bank sold its mass affluent-focused personal financial management business to Creative Planning, an Overland Park, Kan.-based registered investment advisor. The financial terms weren’t disclosed at the time.
There may be further signs of Goldman’s retreat from consumer banking. The bank’s senior executives are hoping Goldman exits its remaining consumer businesses such as its
Apple
(AAPL) credit card, other Apple products, and its General Motors (GM) credit card, The Wall Street Journal reported Monday.
Goldman partners have complained those businesses have been more trouble than they are worth, the Journal reported, citing sources familiar with the matter. That said, it is unclear if Goldman would be able to completely unload those businesses given the Apple credit card’s loss rates, the outlet reported.
Goldman declined to comment.
Goldman will be holding a call with analysts at 9:30 a.m. ET.
Write to Carleton English at carleton.english@dowjones.com
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