Goldman Sachs loses profit after hits from GreenSky, real estate24 July, 2023 3:56 PM
Second-quarter profit fell 58% to $1.22 billion, or $3.08 a share, due to steep declines in trading and investment banking and losses related to GreenSky and legacy investments that shaved about $3.95 from earnings a share. Revenue fell 8% to $10.9 billion.
The company posted a $504 million impairment related to GreenSky and $485 million in property write-downs. Those charges flowed through its operating expense line, which rose 12% to $8.54 billion.
The bank's shares climbed by less than 2%.
Goldman CEO David Solomon faces a tough environment for his most important businesses as the slump in investment banking and trading activities drags on. In addition, Goldman warned investors about commercial real estate write-downs and impairments related to the planned sale of fintech unit GreenSky.
Unlike its more diversified competitors, Goldman derives most of its revenue from volatile activities on Wall Street, including trading and investment banking. This can lead to excessive returns in boom times and underperformance when markets do not cooperate.
Goldman's results "reflect the narrowing of the business mix, which is more reliant on investment banking and core investments," David Fanger of Moody's Investors Service said in an email. "When client activity remains weak and higher interest rates pressure valuations, profits fall more than at a bank with higher recurring revenues."