Goldman profit slumps 33pc as Solomon pleads patience on pivot

afr.com:

New York | Goldman Sachs posted a second straight quarter of real estate write-downs and a continued dealmaking slump, leaving the investment bank’s profitability at about half the level it’s targeting.

Property investments drove a $US212 million ($333 million) loss in the equity book last quarter and an additional $US358 million in impairments contributed to a 33 per cent drop in profit. Trading revenue that surpassed analysts’ estimates helped soften the blow.

Goldman CEO David Solomon: “We continue to be very optimistic about our view to deliver meaningfully higher returns to our shareholders.” Bloomberg

Goldman suffered its eighth straight quarterly profit drop, and the bank’s return-on-equity of 7.1 per cent remains well below the mid-teens target it has set for itself. Chief executive David Solomon is trying to revive the bank’s stock after backing off from a consumer-banking expansion and refocusing efforts on core business lines.

“I think you can get very comfortable with the mid-teens target” for return on equity, Solomon said on a conference call with analysts. “We continue to be very optimistic about our view to deliver meaningfully higher returns to our shareholders.”

Investment bankers have been eager to signal that the business has reached a trough, and that they expect to see a return to normalcy in 2024. Early signs of green shoots in capital markets have been slow to take off because of political uncertainty in Washington, the risk interest rates will rise further and raging conflicts around the world.

Solomon said in a statement that he expects “a continued recovery in both capital markets and strategic activity if conditions remain conducive”, adding that “as the leader in M&A advisory and equity