Third quarter profits at Goldman Sachs (GS) fell as the Wall Street giant continued its costly retreat from consumer banking and tried to recover from a prolonged slump in dealmaking.
Its earnings were $2.06 billion, down 33% from $3.07 billion a year ago. That result was affected by a $506 million write-down on GreenSky, a specialty lender it agreed to sell, and $358 million in impairments on real estate investments.
Its performance during the quarter trailed other big-bank rivals JPMorgan (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), all of which reported profit increases year over year.
But there were some positives. Earnings at Goldman were up 69% when compared to the second quarter, a period when Goldman reported its lowest quarterly profits since early 2020. Its investment banking fees of $1.5 billion were up 9% from the second quarter and up 1% from a year ago.
Goldman helped a number of prominent companies, including Arm (ARM) and Instacart (CART), go public in the second quarter.
Fixed-income trading revenues were also up 25% from the second quarter although down 6% from a year ago. Equities trading was flat when compared with the second quarter and up 8% from a year ago.
"I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive," Goldman CEO David Solomon said in a statement. "As the leader in M&A advisory and equity underwriting, a resurgence in activity will undoubtedly be a tailwind for Goldman Sachs."
Goldman's stock fell 1.6% Tuesday.
Solomon is under pressure to improve Goldman's results after wrestling with everything from job cuts and a global investment banking slump to reports of partner unrest. He is trying to focus the firm around its traditional core strengths of wealth management, trading, and investment banking.
In recent months he agreed to sell GreenSky to an investment consortium and announced Goldman had found a buyer for a personal finance unit that serves the mass affluent.
Goldman is selling GreenSky less than two years after buying it in 2022 for $1.73 billion. It provided Goldman with a fintech platform for home improvement lending, but the firm looked to sell it as it decided to move away from a push into consumer banking.
"We continue to make significant progress executing on our strategic priorities and we’re confident that the work we’re doing now provides us a much stronger platform for 2024," Solomon said.
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