Goldman Sachs expects $400M writeoff in latest hit from consumer business exit

The numbers don’t lie. Goldman Sachs (NYSE:GS) is warning of some trouble for the third quarter after witnessing a strong rebound in the first half of the year. The storied investment bank sees trading revenue headed for a 10% decline due to difficult fixed-income conditions and year-over-year comparisons, while it is also preparing to take a $400M pretax hit related to its costly exit from the consumer arena.

Bigger picture: Before embarking on a turnaround, Goldman (GS) closed out a difficult 2023 after profits fell by nearly a third from the prior year. It stemmed from a slump in investment banking deals and earlier writeoffs surrounding its Marcus consumer banking franchise, which resulted in some high-profile departures from the firm. There was even a point where there were whispers that CEO David Solomon was on his way out, but those rumors have since cooled as he approaches six years in the top spot.

First pivoting away from its consumer business, Goldman (GS) eventually decided to nix it entirely. It was an expensive endeavor that saw it record billions of dollars in losses, and abandon other mass-market products like its financial planning unit, online lending service GreenSky, and its partnership with the Apple Card. That led to many questions about leadership, as well as effective collaboration and communication within the organization.

What’s next? Things at the bank now seem to have stabilized after doing “too much, too quickly.” Goldman’s (GS) core global banking & markets, or GBM, division has topped the market share of its rivals, while the bank has seen strong growth within its asset and wealth management unit. That appears to have kept Solomon, who is known for his brash attitude, at the top, with the stock advancing 130% since he took the helm in October 2018.