Goldman Sachs Sees $400M Hit To Q3 Revenue, Trading Revenue To Drop 10%

Goldman Sachs said it expects its pre-tax revenue for the third quarter to be down by $400 million as the investment banking giant continues to unwind its consumer business.

The unloading of its GM Card business, including a separate portfolio of its loans, would weigh on the firm's revenues for the third quarter, CNBC reported citing company's CEO David Solomon.

This is considered as one of the most recent woes faced by the firm following a push of Solomon into the consumer retail business. In 2022, Goldman Sachs started its shift from consumer business by writing down assets to focus on its core investment banking business.

Goldman's credit card business such as Apple Card resulted in more losses and regulatory resistance, despite boosting retail lending.

Goldman started the process of exiting consumer retail business in late 2022. In October 2022, Goldman said it will instead focus on the current customers of Marcus, a strategic shift from its earlier plans to acquire customers on a mass scale. A year after in October 2023, Goldman agreed to sell its fintech lending platform GreenSky to a group of investors led by private equity firm Sixth Street.

In April 2024, Goldman signed a deal to sell Marcus Invest's digital investing accounts to digital investment advisor Betterment. The company, however, said it will continue to focus on its growing Marcus Deposits platform, which serves over three million customers globally and has well over $100 billion in consumer deposits.

In April 2024, Wall Street Journal reported that Goldman was negotiating with Barclays to sell its GM Card platform to focus on wealth management business.

Meanwhile, Solomon noted that they are also expecting a 10% decline in trade revenue for the third quarter due to difficult trading conditions in August for fixed-income markets.

Given "a more challenging macro environment, particularly in the month of August, that business is trending down close to 10%," Solomon told investors at a financial conference in New York on Monday.

However, Solomon noted that the U.S. economy has been in "reasonable shape," suggesting credit conditions are expected to remain relatively steady.

Goldman Sach's profit more than doubled in the second quarter, driven by a rebound in dealmaking along with strong performances in debt underwriting and fixed-income trading.