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To: Johnny Canuck who wrote (59919)9/9/2024 6:42:03 PM
From: Johnny Canuck  Read Replies (1) | Respond to of 60933
 
Goldman CEO Solomon Expects Trading Revenue Drop in Third Quarter

By

Rebecca Ungarino

Published: Sept. 9, 2024 at 6:19 p.m. ET

Referenced Symbols


David Solomon, CEO of Goldman Sachs, said that investment banking activity “continues to be better.” Photo: Jeenah Moon/Bloomberg
David Solomon, Goldman Sachs


GS

1.87%

’s chief executive, said on Monday afternoon that he expects the bank’s trading revenue to fall 10% in the third quarter from a year ago. That’s owed to a challenging macroeconomic backdrop, especially during August, he said.

Solomon told investors during a financial industry conference held by Barclays

BARC

1.43%

that after a notably strong third quarter of 2023, revenue generated by fixed income, currencies, and commodities—known altogether as FICC—and equities would likely decline, led by FICC.

When Barclays analyst Jason Goldberg asked Solomon what was challenging within FICC trading, he said: “It’s nothing in particular. We had a very, very strong third quarter of 2023.”

Shares of Goldman fell 1% in after-hours trading on Monday. The stock is up 26% this year and, like the S&P 500


SPX

1.16%

, is near its record high.

Banks like Goldman and Morgan Stanley

MS

1.65%

have large trading businesses that are often tethered to the swings of global financial markets. The market broadly sold off in early August before recouping most of those losses later in the month.



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Many Wall Street banks including Goldman have sought to diversify their models in recent years to lean more heavily on businesses that tend to produce more predictable profits, like wealth management.

In the second quarter, Goldman posted FICC revenues of $3.2 billion, up 17% from a year prior, while revenue stemming from FICC financing was a near-record of $850 million. Equities revenue rose 7% to $3.2 billion.

Solomon also said on Monday that investment banking activity “continues to be better,” pointing to encouraging signs in its backlog of business. He said, though, that he is surprised that financial sponsors’ activity “has not turned on as quickly as I would have expected.” He anticipates that activity will pick up.

Big investment banks have gone through a drought of advising on big-ticket transactions like initial public offerings and acquisitions as interest rates have remained elevated. That has been reversing in recent months as executives and their advisors forecast the Federal Reserve will cut rates, a move expected to boost corporate clients’ appetite for big deals.

Investors will get a more complete picture of how Goldman and its rivals are faring when they report third-quarter earnings next month.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com





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  • GS

    1.87%


  • BARC

    1.43%


  • SPX

    1.16%