Goldman Sachs Group reported a bigger-than-expected drop in second-quarter profit as a retreat from consumer businesses and declining investment values took a toll on the Wall Street giant.
The bank took a writedown of $504 million tied to its GreenSky business and $485 million related to its consolidated real estate investments.
It was Goldman’s lowest quarterly profit since the second quarter of 2020. Earnings fell more than 60% to $1.07 billion, or $3.08 per share, for the three months ended June 30, the bank reported on Wednesday.
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That compares to $2.79 billion, or $7.73 per share, a year earlier. Analysts had expected a profit of $3.18 per share, according to Refinitiv data.
Goldman agreed to acquire Greensky, which facilitates home improvement loans to consumers, for $2.2 billion in 2021 and closed the deal at $1.7 billion.
CEO David Solomon told analysts in April that GreenSky is a “good business” but the bank might not be the “best long-term holder of this business” given its strategic priorities.
Goldman’s Marcus unit was also folded into its merged asset and wealth management arm last year, as the investment bank began pulling back from retail banking.
The sale of “substantially all of the remaining” Marcus loans portfolio also resulted in a gain of $100 million for Goldman.
Goldman’s asset and wealth management unit brought in 4% lower revenue compared to last year, hurt by losses from real estate investments.
The bank’s report rounds out a strong quarter for big U.S. banks, which pointed to a resilient economy but offered further evidence that high borrowing costs will begin to weigh on loan demand later this year. READMORE