Goldman Sachs (NYSE:GS) has reported a sharp decline in second-quarter earnings after the investment bank wrote down its investment in home improvement lender GreenSky and due to a decline in M&A activity.
In a results statement, the bank attributed an increase in operating expenses to a $504 million impairment of goodwill related to its consumer platforms unit and impairments of approximately $485 million related to consolidated real estate investments.
Goldman acquired GreenSky for $2.24 billion in September 2021 but subsequently decided to pull back from the consumer finance market.
“This quarter reflects continued strategic execution of our goals,” commented chairman and CEO David Solomon.
Net revenues for the quarter to June 30, 2023, came in 8% lower at $10.9 billion due to declines at its Global Banking & Markets and Asset & Wealth Management divisions.
The bank noted that a 20% decrease in investment banking fees reflected a “significant decline in industry-wide completed mergers and acquisitions transactions.”
Net earnings for the period amounted to $1.22 billion, down 58% from $2.93 in 2Q 2022, while diluted earnings per share sank 60% to $3.08.
“Global Banking & Markets delivered solid returns in an environment with cyclically low activity levels and we remained #1 in completed M&A – a testament to our world-class client franchise,” Solomon added.
“Asset & Wealth Management produced record AUS (assets under supervision), record Management and other fees and record net revenues in Private banking and lending. I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders.”
Goldman has increased its quarterly dividend to $2.75 per common share from $2.50.
Its shares were down 1.3% at $332.90 ahead of the market open.
Contact the author at stephen.gunnion@proactiveinvestors.com