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The Numbers
Goldman Sachs reported a revenue of $1.1 billion within the second quarter, down greater than 60 % from a 12 months earlier.
The financial institution highlighted write-downs within the worth of its industrial actual property portfolio, a $1.2 billion hit to revenue, and the buy-now-pay-later agency GreenSky, which subtracted almost $700 million from its earnings. Goldman acquired GreenSky lower than two years in the past, as a part of an ill-fated foray into shopper lending.
Quarterly income, at $10.9 billion, was 8 % decrease than it was a 12 months earlier.
The financial institution employed 44,600 folks on the finish of June, down 2,400 from a 12 months earlier. Goldman has gone via at the very least three rounds of layoffs this 12 months, taking head rely down 8 % to date this 12 months.
Takeaways
This appears to have been a rip-the-Band-Assist-off quarter for Goldman. The actual property write-down, specifically, appeared to pack potential losses into the interval.
There are, nonetheless, good causes for the transfer. Distant or hybrid work seems right here to remain, and that has bleak implications for office space and landlords in many cities. Having already conceded some losses in that space, Goldman can now shift consideration to different areas of the enterprise like funding banking, which tends to ebb and move.
“It positively feels higher over the course of the final six to eight weeks than it felt earlier within the 12 months,” Mr. Solomon mentioned.
Context
The large query for Mr. Solomon is whether or not he can persuade buyers — and plenty of inside his personal agency — of a return to the much-feared Goldman of yore.
The financial institution is sort of a 12 months into an prolonged apologia for its shopper woes, which at one level included Marcus, a shopper division named after the corporate’s founder, credit-card choices and financial savings accounts aimed on the mass market. The bank said this year that it had lost greater than $3 billion tied to these efforts since December 2020.
The financial institution remains to be unwinding many of the enterprise, at a loss, and it could anticipate extra ugly headlines till that’s completed.
What’s Subsequent
Not like extra diversified lenders like JPMorgan Chase, Goldman depends closely on its Wall Avenue franchise, and company exercise has been muted within the face of financial uncertainty, rising rates of interest and the like. That signifies that if there’s a extended chill in deal-making, there could also be little that the financial institution can do to completely insulate itself.
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