TORONTO, Sept 9 (Askume) – Goldman Sachs ( GS.N ) Chief Executive David Solomon said on Monday that trading revenue is likely to fall by 10% in the third quarter, extending last month’s slowdown.
“Given the more challenging macro environment, particularly in August, trading volumes were down by approximately 10%,” Solomon told investors at a financial conference in New York.
The decline comes after a strong performance by the business in the third quarter of 2023, when equity revenue grew 8%.
The Wall Street giant ‘s second-quarter profit more than doubled as deals accelerated and loan underwriting and fixed income trading performed particularly well.
Investment banking continues to improve, although activity from financial sponsors has not been as good as expected, Solomon said. He expects private equity deals to get back on track later this year and into 2025.
He declined to give a forecast for the investment bank’s revenue.
Citigroup (CN) Chief Financial Officer Mark Mason said in the same conference on Monday thatInvestment banking expenses in the third quarter are expected to increase by 20% compared to the same period last year.
Solomon said Goldman Sachs will continue to focus on its consumer business. He cited Goldman’s plan to exit selling loans to small and medium-sized businesses and its credit card partnership with General Motors as signs that the bank is exiting the retail business, a move that will begin in late 2022.
“In total, these factors will have a pre-tax impact of approximately $400 million in the quarter, primarily reflected in revenue,” Solomon said.
A person familiar with the matter told Askume in April that General Motors was in talks with Barclays about a credit card partnership deal that would replace Goldman Sachs.
At the same time, the U.S. economy is in “fair shape,” which suggests debt conditions will remain relatively stable, he said.
