Goldman Sachs CEO David Solomon attended the Goldman Sachs Financial Services Conference in New York on December 6, 2022.
Image Source: Michael Nagle | Bloomberg | Getty Images
Goldman Sachs is set to release its second-quarter earnings before the market opens on Wednesday.
Here’s what Wall Street is anticipating:
- Earnings: $3.18 per share, according to Refinitiv
- Revenue: $10.84 billion
- Trading revenue: Fixed income $2.78 billion; equities $2.42 billion, according to FactSet
- Investment banking revenue: $1.49 billion
Expectations for Goldman Sachs this quarter have been quite low.
The bank is facing challenges in its most important businesses due to a downturn in investment banking and trading activity. Additionally, Goldman has cautioned investors about potential write-downs on commercial real estate and impairments related to the planned sale of its fintech unit, GreenSky.
As a result, the bank’s second-quarter results are expected to be among the weakest during CEO David Solomon’s tenure.
In contrast to its more diversified competitors, Goldman Sachs derives the majority of its revenue from the volatile Wall Street activities such as trading and investment banking. This can yield significant returns during favorable market conditions but may result in underperformance when the markets are uncooperative.
Goldman Sachs has already projected a 25% decline in trading revenue for the quarter. Investment banking has also been subdued due to limited issuance and initial public offerings amid the Federal Reserve’s interest rate hikes. However, JPMorgan Chase, a rival bank, recently reported better-than-expected trading and banking results, indicating a potential improvement in activity towards the end of the quarter, which raises the possibility that Goldman Sachs may exceed its guidance.
Analysts are likely to inquire about Solomon’s plans regarding the continued divestment from the bank’s ill-fated foray into consumer banking. There have been reports of Goldman being in talks to offload its Apple Card business to American Express, although the progress of these discussions remains unclear.
Goldman Sachs’ stock has experienced a decline of nearly 2% this year, in contrast to the approximately 18% decrease in the KBW Bank Index.
Last week, JPMorgan, Citigroup, and Wells Fargo all reported earnings that surpassed analysts’ expectations, buoyed by higher interest rates. Moreover, Bank of America and Morgan Stanley also exceeded forecasts in their recent results.
This story is developing. Please check back for updates.
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