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Goldman Sachs CEO David Solomon. Picture: ELIZABETH FRANTZ/REUTERS
Goldman Sachs CEO David Solomon. Picture: ELIZABETH FRANTZ/REUTERS

Bengaluru/New York — Goldman Sachs Group’s second-quarter profit fell as the Wall Street giant took a $504m writedown tied to its GreenSky business, while the investment banking business took a hit from lower deal-making volumes.

It reported on Wednesday a profit of $1.07bn, or $3.08 per share, for the quarter to end-June, compared with $2.79bn, or $7.73 per share, a year earlier.

Ten straight rate hikes by the Federal Reserve have left the economy on a shaky ground, with many executives predicting a slowdown in the second half of the year.

That has prevented the market for mergers and acquisitions from roaring back to life even as it has begun to show some signs of recovery.

Investment banking fees for the quarter fell 20% to $1.43bn. Trading revenue for fixed income, currency and commodities fell 26%, while equities trading revenue was broadly unchanged.

Greensky, which facilitates home improvement loans to consumers, was acquired by Goldman in September 2021 in a $2.24bn stock deal, which closed a year ago.

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 report rounds out a strong quarter for big US 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.

On Tuesday, Goldman’s peer Morgan Stanley said its investment banking revenue was in line with last year, but the trading business had weakened.

Analysts are optimistic that an ongoing recovery in stock markets will encourage deal-making and prompt more initial public offering hopefuls to list their shares in the coming months.

However, uncertainty about the trajectory of the US economy continues to be a hurdle, with global mergers and acquisitions (M&A) activity falling 36% from last year in the second quarter.

Goldman’s asset and wealth management unit brought in 4% lower revenue compared with last year.

Reuters

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