[1/2] Goldman Sachs President and Chief Operating Officer John Waldron speaks during the Goldman Sachs Investor Day at Goldman Sachs’ headquarters in New York City, U.S. February 28, 2023. REUTERS/Brendan McDermid
NEW YORK, June 1 (Reuters) – Goldman Sachs Group Inc (GS.N) plans more job cuts as the difficult economic environment hampers doing business and warned trading revenue could fall 25% this quarter, the company said President of the bank on Thursday.
“The macro backdrop is extraordinarily challenging,” John Waldron, Goldman’s president and chief operating officer, told investors at a conference, without specifying the scale of the layoffs.
Goldman Sachs shares fell 1.8% in afternoon trade, lagging the S&P 500 financial index (.SPSY), which was up about 1%.
The company is expected to cut nearly 250 jobs in the coming weeks, a source familiar with the matter told Reuters in May. 3,200 jobs were cut in January, the largest job cuts since the 2008 financial crisis.
Waldron said the latest job cuts will help the Wall Street titan meet the $600 million goal it set in February for cutting labor costs, and said the bank could surpass that goal by the end of the year.
He also said he expects market earnings for both equities and fixed income to fall by 25% year-on-year in the current quarter, as macroeconomic factors such as interest rate hikes and the war in Ukraine boost fixed income and commodity trading had.
Goldman’s global market unit, which houses its trading desks, saw revenue rise 32% in the second quarter of 2022, with trading revenues from fixed income, commodities and foreign exchange up 55% and revenues from equities up 11%.
“If you think about global banking and global markets, activity in capital markets is more sluggish… In market-oriented companies, equities and fixed income, activity levels are more subdued,” Waldron said.
The comments echoed those of Wall Street competitors. Andy Saperstein, co-chairman of Morgan Stanley, warned Wednesday that second-quarter trading results will be “significantly down” from a year earlier, while “investment banking also faces significant challenges.”
JPMorgan Chase & Co’s (JPM.N) investment banking and trading revenues are both expected to decline 15% in the second quarter, Daniel Pinto, the bank’s president, said in May.
Waldron also said that Goldman Sachs is in the process of selling its fintech company GreenSky and may take impairments on the company’s goodwill, which is valued at $500 million.
“As the market has weakened, we have been monitoring whether this goodwill should degrade over time,” he said.
He said the bank may also consider selling GreenSky’s loan portfolio separately.
Goldman Sachs had previously sold $1 billion worth of loans from its consumer bank Marcus portfolio and plans to further reduce the portfolio, the company announced in April.
Goldman Sachs CEO David Solomon had championed Goldman’s foray into consumer banking since taking office in 2018. But the consumer business largely failed to compete with established consumer banks, losing billions of dollars to lending.
Waldron said Goldman has grown its funding revenue by $3 billion over the past three years and sees more room to gain market share as other lenders, such as regional banks, step down.
Reporting by Saeed Azhar and Niket Nishant. Edited by Nick Zieminski and Marguerita Choy
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