Goldman Sachs Group Inc.’s stock was down 1.5% in premarket trading Wednesday after the bank reported second-quarter earnings that fell short of Wall Street’s lowered expectations.
It was the only profit-target miss among the six largest U.S. banks, at a time when Goldman Sachs CEO David Solomon remains in the hot seat with some partners at the firm over missteps in the bank’s consumer business and other issues.
Goldman’s rising expenses ate into its profit, but, on the plus side, the bank beat revenue projections on strength in its global banking and markets unit. The bank also booked a $485 million impairment charge related to consolidated real-estate investments both in depreciation and amortization, as well as a $504 million loss in its GreenSky consumer lending business.
Goldman Sachs
GS,
said its earnings for the three months ending June 30 fell by more than half to $1.07 billion, or $3.08 a share, from $2.79 billion, or $7.73 a share, in the year-ago period.
Goldman fell short of the analyst expectation for per-share earnings of $3.16, according to estimates compiled by FactSet.
Goldman Sachs’s second-quarter revenue fell to $10.9 billion, from $11.86 billion, but that was ahead of the analyst estimate of $10.61 billion.
CEO Solomon said the second-quarter reflected “continued strategic execution of our goals” with “solid return” in the global banking and markets unit despite an “environment with cyclically low” levels of activity.
“I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders,” Solomon said.
Analyst projections for Goldman Sachs’s second-quarter profit have moved down in recent months, with the estimate at $7.84 a share on March 31, according to FactSet data.
Goldman’s second-quarter operating expenses increased by 12% to $8.54 billion, well above the analyst estimate of $7.67 billion.
Goldman said the increase in operating expenses reflected a $504 million impairment of goodwill related to its GreenSky consumer platforms. Goldman has reportedly been trying to sell the installment-loan business of GreenSky, after paying $1.7 billion for it in 2021.
Goldman is also reportedly selling its credit-card alliances with Apple Inc.
AAPL,
and General Motors Co.
GM,
but has been mum about that thus far.
The bank said it marked down the value of some of its real-estate investments but did not elaborate.
Also read: Goldman discloses losses in unit that houses Apple Card, GreenSky operations
Goldman’s investment-banking fees fell 20% to $1.43 billion, short of the analyst estimate of $1.49 billion.
Asset and wealth-management net revenue fell 4% to $3.05 billion, below the estimate of $3.69 billion.
Global banking and markets revenue fell 14% to $7.19 billion but beat the analyst estimate of $6.65 billion.
Goldman increased its quarterly dividend to $2.75 per common share from $2.50 per share.
Prior to Wednesday’s trades, Goldman Sachs’s stock was down 1.8% so far in 2023, compared with an 18.6% increase in the S&P 500.
Also read: Banks are doing better than feared as stocks rally and Bank of America builds cash
This post was originally published on Market Watch
