Goldman Sachs, under the leadership of CEO David Solomon, is facing a significant setback in its third-quarter results. The bank will be hit with a pretax loss of approximately $400 million as it continues to unwind its struggling consumer business. Solomon announced this development during a recent conference, explaining that the bank’s decision to unload its GM Card business and a separate loan portfolio would have an impact on revenues when the results are reported next month.
This latest turbulence is a result of Goldman’s attempt to venture into the consumer retail sector. In late 2022, the bank started to pivot away from its nascent consumer operations, leading to a series of write-downs associated with selling parts of the business. One particular area of concern has been Goldman’s credit card business, including its popular Apple Card. While the card allowed for rapid growth in retail lending, it also resulted in losses and regulatory challenges.
To navigate this challenging landscape, Goldman Sachs is shifting its focus towards asset and wealth management. The bank has been in discussions with Barclays about selling its GM Card platform, as reported by The Wall Street Journal in April. By focusing on these areas, Goldman hopes to drive growth and mitigate the impact of its struggling consumer business.
In addition to the issues with its consumer business, Goldman Sachs is also expecting a decline in trading revenue for the quarter. Solomon revealed that there would likely be a 10% decrease in trading revenue due to a tough year-over-year comparison and difficult trading conditions in August, particularly in the fixed-income markets.
Despite these challenges, Goldman Sachs is not without its positive outlooks. The bank has been providing valuable insights to its clients through CNBC PRO, including recommendations for top Dow stocks in August and their future prospects. Additionally, Goldman Sachs has been advising its clients to invest in gold, recognizing the metal’s potential amid geopolitical risks and ongoing rate cuts.
In conclusion, Goldman Sachs is grappling with the consequences of its ill-fated consumer business, which has resulted in a significant pretax hit to its third-quarter results. CEO David Solomon acknowledges the challenges but remains focused on redirecting the bank’s efforts towards asset and wealth management. While trading revenue is expected to decline, the bank continues to provide valuable insights to clients through CNBC PRO and advises investing in gold as a strategic move. Despite the setbacks, Goldman Sachs remains committed to finding new avenues for growth and profitability.
