Goldman Sachs CEO Solomon expects that the third-quarter performance to be announced next month will be impacted; Solomon believes that due to a more challenging macro environment, combined with a difficult trading environment in the fixed income market in August, the bank's trading business is trending down by nearly 10%; In addition, the continuously divested consumer business will also suffer a pre-tax decline of 0.4 billion US dollars.
Goldman Sachs CEO David Solomon anticipates that the third-quarter performance to be announced next month will be impacted.
Goldman Sachs CEO David Solomon mentioned at a financial conference hosted by Barclays on Monday, September 9th, that the bank's third-quarter trading business is expected to decline by 10% year-on-year, with fixed income business experiencing the largest decline. In addition, the continuously divested consumer business will also suffer a pre-tax decline of 0.4 billion US dollars.
Trading business is not being viewed favorably.
Solomon stated at the meeting that, given the more challenging macro environment, along with the difficult trading environment in the fixed income market in August, the bank's trading business is trending down nearly 10% in the third quarter, while analysts had originally expected Goldman Sachs' trading business to decline by 6.6% in that quarter.
It is worth noting that in the mid-July release of Goldman Sachs' Q2 financial report, the revenue from the trading department exceeded expectations, driving a 150% increase in the investment bank's Q2 profit. In the second quarter, both fixed income and stock trading businesses showed outstanding performance, and the rebound in the capital markets business also helped the company achieve good quarterly results.
In addition to the unfavorable view of the third-quarter trading business, Goldman Sachs' consumer business has also had a difficult time in recent years. At the end of 2022, Goldman Sachs decided to gradually exit the newly-initiated consumer retail business, and began a series of write-offs related to the divestment of large businesses, such as the GM Card business, as well as selling loan portfolios to small and medium-sized enterprises.
According to insiders, General Motors is in negotiations with Barclays to replace Goldman Sachs in the credit card cooperation agreement.
Solomon pointed out that "these factors combined may have a pre-tax impact of approximately $0.4 billion this quarter, primarily reflected in revenue."
Currently, Goldman Sachs is focusing on asset and wealth management business, hoping to drive growth through this. Solomon also expressed confidence in the investment banking business, believing that the investment banking business will continue to improve. He hopes that private equity-dominated transactions will rebound by the end of this year or in 2025, but he did not make a prediction for the third quarter investment banking revenue.
So far this year, the stock has risen by more than 25%, driven by the recovery of the major investment banking business.
Editor/ping