Goldman sees profits plummet on investment writedowns
Goldman Sachs' profit dropped 60 percent in the second quarter, missing estimates, as writedowns on the investment bank's consumer businesses and real estate investments weighed on earnings. But shares rose almost 2 percent as CEO David Solomon cited signs of a recovery in investment banking. The results were the worst for the Wall Street giant since the second quarter of 2020, when it took writedowns over a corruption scandal linked to Malaysian state fund 1MDB. The economic environment "definitely feels better over the course of the last six to eight weeks," Solomon told analysts on a conference call. "The inflation data's been better, the client sentiment is better, and now we'll have to watch and see." He cited activity picking up in equity capital markets and a revival of client discussions on mergers and acquisitions. Goldman took US$1.4 billion in writedowns in the second quarter tied to its GreenSky fintech business, which facilitates home improvement loans to consumers and real estate investments. It also booked credit losses related to its consumer loans and credit card business. "This moment in the economic cycle creates meaningful headwinds for Goldman Sachs," Solomon said. "We are making tough decisions that are driving the strategic evolution of the firm. Given both these factors, it should come as no surprise that we're going to a period of lower results." (Reuters)