San Francisco Frontiers - Goldman Sachs profits fall in third quarter on real estate hit

The bank reported profits of $1.9 billion, down 36 percent from the same period last year. Its net revenues were essentially unchanged in this timeframe, at $11.8 billion.

The bank reported net losses from real estate investments among other areas.

This weighed on its asset and wealth management unit, which saw 20 percent lower net revenues from a year ago.

But its results topped expectations, and chief executive David Solomon highlighted in a conference call that the bank played a key role in recent major initial public offerings, including those of chip designer Arm and shoe maker Birkenstock.

He said he is very confident about the bank's long-term opportunities.

On Tuesday, Goldman also said it took a write-down of $506 million on GreenSky -- a fintech platform for home improvement loans that Goldman acquired with fanfare in 2021.

It announced a $2.2 billion all-stock acquisition of GreenSky in September 2021, with the deal closing at a valuation of $1.7 billion.

The firm has since reached a deal to sell GreenSky, after a financial hit linked to the business in the previous quarter.

The bank earlier reported that it suffered a pre-tax loss of $677 million on GreenSky.

Goldman shares were down 2.0 percent around 1430 GMT.

- 'Geopolitical stresses' -

"There's been an escalation of geopolitical stresses around the globe," Solomon said on the call, citing war in Ukraine, tensions with China and conflict in the Middle East.

"Overall levels of risk are more elevated than we've seen in quite some time," he added, noting it could impact economic growth and stability.

"We remain cautiously positioned," he said.

But for now, Solomon said in a statement Tuesday morning: "We're confident that the work we're doing now provides us a much stronger platform for 2024."

"I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive," he added.

Also Tuesday, Bank of America reported better earnings than expected in the third quarter with its net income rising 10 percent to $7.8 billion.

This came on the back of a three percent jump in revenue, net of interest expenses, to $25.2 billion.

Chief executive Brian Moynihan noted in a statement that its performance came about "in a healthy but slowing economy that saw US consumer spending still ahead of last year but continuing to slow."

However, "we added clients and accounts across all lines of business," he said.

The latest results by Goldman Sachs and Bank of America come after banks JPMorgan Chase, Citi and Wells Fargo reported robust earnings last week, reflecting a continued boost from higher interest rates.

But executives cautioned that beneficial industry conditions were moderating while the wars in Ukraine and the Middle East are adding to uncertainty.

D.Robinson--SFF