Goldman Sachs CEO Predicts 10% Decline in Trading Revenue for 3Q, According to Reuters

By Saeed Azhar

TORONTO – Goldman Sachs is anticipated to see a decline of approximately 10% in trading revenue for the third quarter due to sluggish market conditions in August, according to CEO David Solomon. Speaking at a financial conference in New York, Solomon pointed out that the trading business is trending down by nearly 10% due to the more challenging macro environment experienced last month.

This anticipated drop follows a strong performance in the third quarter of 2023, where revenues from equities surged by 8%. The firm reported that its profit more than doubled in the second quarter as appetite for deal-making surged, particularly benefiting debt underwriting and fixed-income trading.

Despite a slowdown in activity from financial sponsors, Solomon noted that investment banking is on an upward trajectory and expressed optimism that private equity-driven deals would see a resurgence towards the end of this year and into 2025. However, he refrained from providing specific revenue forecasts for the investment banking segment.

At the same event, Citigroup’s Chief Financial Officer Mark Mason suggested that investment banking fees are expected to increase by 20% in the third quarter compared to the same period last year.

Goldman Sachs is also refining its focus on consumer-related business activities. Solomon discussed the company’s recent decision to sell loans to small and medium-sized businesses and its planned exit from a credit card partnership with General Motors as part of a broader strategy to step back from retail operations, a move that began in late 2022. He mentioned that these changes could lead to an approximate $400 million pre-tax impact, mostly reflected in revenues for the current quarter.

Furthermore, it was reported that General Motors is in negotiations with Barclays for a credit card partnership to replace Goldman Sachs. On a broader note, Solomon remarked that the U.S. economy remains in “reasonable shape,” suggesting stable credit conditions are expected to persist.