Goldman Sachs (GS.N) is expected to see a 10% drop in trading revenue for the third quarter due to sluggish conditions in the previous month, CEO David Solomon said on Monday.r
“With a more challenging macro environment, particularly in August, that segment is trending towards a 10% decline,” Solomon informed investors at a financial conference in New York.
This decline follows a robust trading quarter in Q3 2023 when equities revenue rose by 8%.
The Wall Street giant’s profit more than doubled in the second quarter as dealmaking surged, with notable performance in debt underwriting and fixed-income trading.
Investment banking continues to show improvement, although activity from financial sponsors has not rebounded as much as anticipated. Solomon expressed hope that private equity-led deals will recover by the end of this year and into 2025.
He opted not to offer a forecast for investment banking revenue.
Earlier on Monday at the same conference, Citigroup’s (C.N) Chief Financial Officer, Mark Mason, stated that investment banking fees are projected to rise by 20% in the third quarter compared to the previous year.
Goldman Sachs is continuing to focus on its consumer business, Solomon noted. He highlighted the bank’s sale of loans to small and medium-sized businesses and its plan to exit a credit card partnership with General Motors as examples of its retreat from retail operations, a shift that began in late 2022.
“This combination of factors is expected to result in an approximate $400 million pre-tax impact this quarter, primarily reflected in revenues,” Solomon said.
General Motors is reportedly in negotiations with Barclays for a credit card partnership to replace Goldman, according to a source familiar with the situation who spoke to Reuters in April.
Solomon also mentioned that the U.S. economy remains in “reasonable shape,” suggesting that credit conditions are likely to stay relatively stable.
