Following a 44% drop in third-quarter profit, Goldman Sachs Group Inc. announced it will reconfigure its business into three units and reduce expectations for its consumer bank, which currently does not make money.
"We are making it clear that we're pulling back on some of that now," Chief Executive Officer David Solomon told an analyst briefing, according to Reuters. "I think one of the big learnings over the last few years is that we're better to play to our strengths."
The establishment of these new segments – asset and wealth management, global banking and markets, and platform solutions – marks the bank’s biggest revamp since 2020. Consumer banking will be absorbed into the wealth management and platform divisions. GreenSky, the fintech lender the bank recently acquired, will fall into the platform segment as well.
As rising interest rates have affected valuations and deal-making, Goldman is hoping to increase income from fee-based businesses.
Along with the restructuring comes shifts in leadership. Marc Nachmann, Global Co-Head of the Global Markets division, will become Global Head of the Asset and Wealth Management division.
U.S. banks experienced a mixed quarter, with slowing economic growth affecting investing.
"Rising borrowing costs, which are boosting net interest income, are working as a sort of parachute for the banks, while the slowing economy is still robust to handle the pain," Guido Petrelli, Founder and CEO of Merlin Investor, told Reuters.
Goldman posted a profit of $8.25 per share in the third quarter, beating average estimates of $7.69, according to Refinitiv data. Rising borrowing costs resulted in a 31% surge in net interest margin.
Total revenue fell 12% to $11.98 billion, while in the consumer and wealth management business, revenue increased 18% to $2.38 billion, a result of higher demand for loans and higher fees from managing assets.
Trading revenue jumped 11% to $6.20 billion, as a 41% increase in fixed income, currency, and commodities revenue offset declines from equity trading revenue, which was down 14%.