Goldman Traders Help Counter Real Estate Hits, Stagnant M&A

Goldman Sachs Group Inc. reported trading revenue that beat analysts’ estimates while a second straight quarter of real estate writedowns dragged profit lower.

Property investments drove a $212 million loss in the firm’s equity book and an additional $358 million in impairments contributed to a 33% drop in profit. Trading revenue was roughly unchanged from a year earlier, while analysts had expected a 13% drop.

The trading strength stood out in a quarter featuring sluggish banking activity and questions about a dealmaking rebound. 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.

David Solomon

David Solomon

Chief Executive Officer David 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 underwriting, a resurgence in activity will undoubtedly be a tailwind for Goldman Sachs.”

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