Goldman Sachs’ third-quarter profit declined, primarily due to a write-down on its GreenSky fintech venture and real estate investments.
On Tuesday, the renowned Wall Street institution disclosed a net profit of $2.06 billion, or $5.47 per share, for the period ending on September 30. This marked a decrease compared to the $3.07 billion, or $8.25 per share, reported in the same period a year ago.
Goldman Sachs (NYSE:GS) incurred substantial losses in its consumer banking venture, amounting to $3 billion over three years.
CEO David Solomon has since shifted the company’s focus back to its traditional strongholds, namely investment banking and trading, with an emphasis on expanding in asset and wealth management.
The bank recorded a $506 million writedown on GreenSky, adding to the $1.4 billion loss associated with the business in the second quarter. GreenSky, which facilitates consumer home improvement loans, was sold to an investment consortium led by Sixth Street Partners. It was acquired for $1.7 billion, although its initial valuation was $2.2 billion when the deal was announced in 2021.
Real estate investments also negatively impacted earnings, as the bank reported an impairment charge of $358 million. This weighed on revenue from its asset and wealth management unit, causing it to decline by 20% to $3.23 billion.
However, there was a glimmer of hope in investment banking, where fees remained largely unchanged at $1.55 billion compared to the previous year. This stability was attributed to a resurgence in debt underwriting activity and increased activity in the initial public offerings market.
CEO Solomon expressed optimism, stating, “I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive.”
The U.S. Federal Reserve is anticipated to raise interest rates once more this year, and many bank executives have indicated their expectation for borrowing costs to remain elevated for an extended period.