Goldman Sachs (ticker: GS) is anticipated to report a significant decline in profits for the second quarter, chiefly influenced by a lackluster environment for mergers and acquisitions. Analysts surveyed by FactSet project the bank’s profits to reach $1.2 billion, equivalent to $3.16 per share. In comparison, the bank’s profit in the same period last year amounted to $2.9 billion. Furthermore, revenue is also expected to slump, with analysts forecasting $10.6 billion, down from $11.9 billion.
The ongoing sluggishness in deal making and the challenging market for initial public offerings have contributed to a 5% decrease in Goldman’s shares this year. Investment banking revenue, which includes advisory and underwriting fees, is projected to decline to $1.5 billion from $2.1 billion.
While Goldman Sachs is the last major bank to announce earnings for this quarter, its performance has been less impressive compared to JPMorgan Chase and Bank of America, both of which reported strong quarters. Morgan Stanley (MS), the bank most similar to Goldman, achieved solid results despite experiencing a decline in advisory fees.
In addition to the weak deal-making climate that the entire industry is contending with, Goldman Sachs is also amidst a turnaround. Consequently, its earnings results will likely serve as a starting point for analyzing the broader challenges the bank is currently facing.
Goldman Sachs’ Struggles in the Consumer Banking Sector
Goldman Sachs has been facing challenges in its pursuit to expand its consumer banking business. Recently, the bank announced its consideration of selling Green Sky, a lending platform it acquired in 2021. Furthermore, reports indicate that Goldman is also looking to end its credit card partnership with Apple.
These setbacks have placed chief executive David Solomon in a difficult position. Solomon has had to defend the firm’s strategy amid a decline in its consumer business, while battling media reports that suggest investors and Goldman employees are losing confidence in his leadership.
In a May interview, Solomon addressed criticisms surrounding his extracurricular activities, such as his time spent as a disc jockey and investments in luxury real estate. Solomon emphasized that despite these outside interests, his primary focus remains on delivering value for shareholders and clients.
“I am fully committed to ensuring we meet the needs of our shareholders and clients. While I understand the attention on other aspects of my life, I urge people to shift their focus to Goldman Sachs. However, like anyone entrusted with running such institutions, I do have outside interests because I am only human,” stated Solomon.
David Solomon faces challenges amidst Goldman Sachs’ struggles in the consumer banking sector.
David Solomon defends his outside activities, emphasizing that his commitment to delivering value for shareholders and clients remains unwavering.
Goldman Sachs evaluates options for its consumer banking business, including the potential sale of Green Sky and discontinuation of its credit card partnership with Apple.