Goldman Sachs profit tumbles on real estate hits, banking slump

Goldman’s management has been working to smooth the firm’s sometimes volatile quarterly results, which featured big gains during the post-pandemic boom followed by a run of missed profitability goals. Investors are looking to see whether the second quarter represents a trough for the New York-based company, with a steadier run of earnings gains ahead.

Equities trading was one bright spot, coming in ahead of its major rivals at $3 billion in revenue, compared with estimates for $2.47 billion.

Goldman’s asset-and wealth-management business posted revenue of $3.05 billion, down 4 percent from a year earlier. Analysts predicted revenue of $3.5 billion for the division. The unit was buffeted by the bank’s exposure to the real estate sector, with writedowns both on its lending portfolio and its equity investments contributing to a $1.15 billion pretax earnings hit tied to its principal investments.

Unlike most of its major competitors, Goldman has aggressively used its own balance sheet to make investments, a strategy that can lead to big swings in results. The firm has been looking to rely more on fees from investing money for other institutions.

The bank also reported a jump in operating expenses due to how it accounts for impairments tied to some of its consolidated real estate investments as well as the goodwill writedown. The impairments totaled about $1 billion.

The bank has been pursuing a sale of the GreenSky business just over a year after completing its purchase — one of the most visible signs of how dramatically management has backtracked on the pursuit of its retail-banking strategy in the past year.