Today’s News
Goldman Sachs CEO David Solomon announced on Monday that the bank’s trading revenue is expected to decline by around 10% in the third quarter due to weaker market conditions, particularly in August.
Speaking at a financial conference in New York, Solomon stated, “Given a more challenging macro environment, particularly in the month of August, that business is trending down close to 10%.”
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This projected decline follows a strong performance in the same quarter last year, when Goldman Sachs saw an 8% increase in equities trading revenue. The bank’s overall profit had more than doubled in the second quarter of this year, driven by a rebound in dealmaking and solid results in debt underwriting and fixed-income trading.
While investment banking activities have shown signs of recovery, Solomon noted that the expected rebound in deals led by financial sponsors has yet to materialize. However, he expressed optimism that private equity-led transactions will pick up towards the end of 2024 and into 2025. He did not provide a specific forecast for investment banking revenue.
Goldman Sachs is also continuing to scale back its consumer-focused businesses. Solomon highlighted the bank’s recent sale of loans to small and medium-sized enterprises and its plans to exit a credit card partnership with General Motors.
These moves are part of a broader strategy that began in late 2022 to reduce its footprint in retail banking. “The combination of those things this quarter will likely have an approximately USD 400 million pre-tax impact, largely showing up in revenues,” Solomon explained.
In related news, Citigroup’s Chief Financial Officer Mark Mason told the same conference that investment banking fees for Citi are expected to surge 20% in the third quarter compared to the previous year.
Goldman Sachs’ focus on narrowing its consumer business comes as General Motors negotiates a potential new credit card partnership with Barclays, a deal that could replace its current arrangement with Goldman, according to a source familiar with the matter. Despite these changes, Solomon noted that the U.S. economy remains in “reasonable shape,” suggesting that credit conditions are likely to stay stable.
Other News
China Trade Data Eyed Amid Market Calm
Asian markets brace for potential disruptions as China releases August trade data, with expectations of a slowdown in exports and imports signaling weak domestic demand.
Citi Expects 20% Rise in Banking Fees
Citigroup’s CFO Mark Mason predicts a 20% increase in investment banking fees for Q3, driven by activity in debt capital markets and M&A, market revenue is expected to dip.
Wall Street Gains as Investors Eye Fed Moves
Major Wall Street indexes rebounded over 1% as investors anticipate key inflation data and the Federal Reserve’s interest rate decision next week.
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