Goldman Profit Tumbles on Real Estate Hits, Dealmaking Slump

Goldman Sachs Group Inc.’s profit plunged as the Wall Street giant notched one of its weakest quarters under Chief Executive Officer David Solomon.

Second-quarter earnings fell 58% on an investment-banking slump, real estate markdowns and a goodwill writedown in the consumer business, which houses the GreenSky lending business. Return on equity, a key measure of profitability, slid to 4% — the worst among the top US banks.

The firm had been actively tamping down expectations heading into the report, prompting analysts to slash their estimates for quarterly profit by almost half since mid-June. Still, executives sought to strike a more hopeful note for the months ahead. Shares of the company advanced 1.5% at 10:47 a.m. in New York.

Solomon said the mergers and capital-markets business is “a fundamental part of our economy” that isn’t going to disappear, even though it’s been depressed for several quarters. “I think this is a cycle,” the CEO said on a call with analysts. “We haven’t seen a cycle in a while, and the other side of the cycle will continue to look attractive.”

Goldman's Profit Slump Is Worst on Wall Street | Earnings tumble on investment-banking slowdown, goodwill writedown

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.