Goldman Sachs sees earnings plunge by a third

Goldman Sachs has reported that its third-quarter earnings fell by 33% due to muted market conditions that meant fewer deals for the US-based investment bank.

The bank also saw a notable rise in expenses in the quarter, as the bank had to write down its investment in lending platform GreenSky as well as its property investments.

The New York-based firm had earnings of 2.06 billion dollars (£1.7bn), or 5.47 dollars (£4.50) a share, down from a profit of 3.07 billion (£2.5bn) dollars, or 8.25 dollars (£6.79) a share, in the same period a year ago.

Analysts had low expectations for Goldman this quarter, with sluggish markets and the firm announcing earlier this year that it was pulling out of its nascent consumer lending business. The bank is selling off its GreenSky business, which the bank had to write off this quarter.

“We’re confident that the work we’re doing now provides us a much stronger platform for 2024,” said David Solomon, chairman and CEO, in a statement.

Goldman has struggled in the past year as fewer businesses have sought to do deals amid higher inflation and geopolitical uncertainty, and market conditions have been tougher this year compared to last.

The bank saw a 1% rise in investment banking revenues from last year while its trading business of bonds, currencies and commodities was down 6% in the period. Equities trading was up 8%.

The bank’s return on equity, a measurement on how well an investment bank is performing with the assets they hold, was 7.1% in the quarter. Historically in the past decade or so, banks like Goldman aim to get that measure above 10%.