On Wednesday, Goldman Sachs released its latest earnings reports, showing a significant decline in profit due to a drop in dealmaking and trading activities, which are crucial parts of the bank’s operations. Additionally, the value of its consumer and real estate businesses decreased by nearly $1 billion, adding to the financial challenges.
The investment banking revenue for the second quarter reports of 2023 declined by approximately 20%, while trading revenue fell by 14%. Consequently, the overall profit plummeted by 58% compared to the previous year, amounting to $1.2 billion. This marks the lowest quarterly profits since early 2020, during the pandemic-induced recession.
CEO David Solomon faced scrutiny over the bank’s shrinking consumer business, which has been underperforming. While Solomon mentioned that there are signs of improvement in the M&A sector, analysts remain unconvinced about the bank’s execution and vision regarding its consumer-focused endeavors.
Solomon emphasized that winding down the consumer lending business would allow the bank to redirect its focus on core strategies. However, some analysts raised concerns about potential internal strife at the company and the potential impact on employee retention if confidence in Solomon’s leadership wanes.
Despite initial stock decline, Goldman Sachs’ shares recovered and were trading nearly 0.9% higher following the earnings call. The bank’s CEO did not address a potential succession plan during the call.