Goldman Sachs to cut more jobs, eyes sharp fall in markets revenue

By Saeed Azhar and Niket Nishant

NEW YORK (Reuters) – Goldman Sachs Group Inc (NYSE:) plans more job cuts as the difficult economic environment weighs on dealmaking, and warned trading revenue could fall 25% this quarter, the bank’s president said on Thursday.

“The macro backdrop is extraordinarily challenging,” Goldman’s President and Chief Operating Officer John Waldron told investors at a conference, without specifying the scale of the layoffs.

Goldman Sachs shares were down 1.8% in afternoon trading, underperforming the financial index, which was up about 1%.

The firm is expected to cut just under 250 jobs in the coming weeks, a source familiar with the matter told Reuters in May. In January, it cut 3,200 jobs, its biggest headcount reduction since the 2008 financial crisis.

Waldron said the latest job cuts will help the Wall Street titan achieve the $600-million target it set in February for reducing payroll expenses, and said the bank may surpass that target by the end of the year.

He also said he expects a 25% fall in market revenue for both equities and fixed income in the current quarter from a year earlier when macro factors, such as interest rate hikes and war in Ukraine, had boosted trading in fixed income and commodities.

Goldman’s global markets unit, which houses its trading desks, saw revenue surge by 32% in the second quarter in 2022, with fixed income, commodities and currency trading revenue surging 55% and equities revenue adding 11%.

“If you think about global banking and markets, the capital markets activity is more sluggish … The markets-oriented businesses, equities and fixed income, the activity levels are more muted,” Waldron said.

The comments echo those of Wall Street rivals. Andy Saperstein, co-president of Morgan Stanley (NYSE:), warned on Wednesday that trading results will be “notably down” in the second quarter versus a year earlier, while “investment banking is also very challenged.”

JPMorgan Chase & Co (NYSE:)’s revenues for investment banking and trading are both expected to decline 15% in the second quarter, Daniel Pinto, the bank’s president, said in May.

Waldron also said Goldman Sachs is running a sale process for its fintech business GreenSky and may take impairment charges on the $500 million worth of goodwill in the business.

“As the marketplace has gotten weaker, we’ve been monitoring whether that goodwill should be impaired over some period of time,” he said.

He said the bank may also consider selling GreenSky’s loan book separately.

Goldman Sachs earlier sold $1 billion worth of loans from its consumer bank Marcus’ portfolio and plans to further reduce the portfolio, it had disclosed in April.

Goldman Sachs CEO David Solomon had championed Goldman’s foray into consumer banking since taking the reins in 2018. But the consumer operations largely failed to gain traction against well-established consumer banks and lost billions of dollars due to credit provisioning.

Waldron said Goldman has grown its financing revenues by $3 billion over the last three years and sees more room to take market share as other lenders such as regional banks step back.