Goldman misses profit estimates as dealmaking slumps, consumer ... - Reuters

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Jan 17 (Reuters) - Goldman Sachs Group Inc (GS.N) connected Tuesday reported a bigger-than-expected 69% driblet successful fourth-quarter nett arsenic it struggled with a slump successful dealmaking, a driblet successful plus and wealthiness absorption gross and booked losses astatine its user business.

Wall Street banks are making heavy cuts to their workforce and streamlining their operations arsenic dealmaking activity, their large root of revenue, stalls connected worries implicit a weakening planetary system and rising involvement rates.

Goldman is besides curbing its user banking ambitions arsenic Chief Executive Officer David Solomon refocuses the bank's resources connected strengthening its halfway businesses specified arsenic concern banking and trading.

Solomon confirmed that the slope was cutting 6% of its headcount, oregon astir 3,200 jobs, and was making changes to the user concern to navigate an uncertain outlook for 2023.

"We tried to bash excessively overmuch excessively quickly," helium said astir the user concern specified arsenic its direct-to-consumer portion Marcus. "We didn't execute perfectly connected immoderate truthful we've taken a hard look astatine those, and you marque adjustments."

Goldman reported a nett nonaccomplishment of $660 cardinal astatine its level solutions unit, which houses transaction banking, recognition paper and fiscal exertion businesses, arsenic provisions for recognition losses grew portion the concern was expanding.

Full-year nett nonaccomplishment for the level solutions concern was $1.67 billion, the slope said, adjacent though nett gross of $1.50 cardinal for 2022 was 135% supra 2021.

Goldman reported a nett of $1.19 billion, oregon $3.32 per share, for the 3 months ended Dec. 31, missing the Street estimation of $5.48, according to Refinitiv IBES data.

Fourth-quarter "feels a spot similar a room sink," said a Deutsche slope enactment led by expert Matthew O' Conner.

"The EPS (earnings per share) miss was owed to overmuch higher-than-expected expenses and outgo of recognition - mostly driven by indebtedness nonaccomplishment reserve build," the enactment said.

Shares of Goldman Sachs were down 6.5% successful precocious day trade, portion shares successful Morgan Stanley (MS.N) soared astir 7% arsenic the slope reported a smaller-than-expected 41% driblet successful fourth-quarter nett connected Tuesday, driven by higher gross astatine its wealthiness absorption division. work much

[1/2] The logo for Goldman Sachs is seen connected the trading level astatine the New York Stock Exchange (NYSE) successful New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly

Goldman connected Tuesday confirmed that it is readying to halt making unsecured user loans aft it moved Marcus into its plus and wealthiness absorption arm. The checking relationship motorboat for Marcus has besides been postponed.

INVESTMENT BANKING OUTLOOK

Goldman's concern banking fees fell 48% successful the latest quarter, portion gross from its plus and wealthiness absorption portion dropped 27% owed to little gross from equity and indebtedness investments.

Solomon said the concern banking outlook could beryllium amended successful the "back half" of 2023, arsenic radical are softening their views connected the economical outlook for this year.

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Wall Street's biggest banks person stockpiled much rainy-day funds to hole for a imaginable recession, portion showing caution astir forecasting income maturation successful an uncertain system and arsenic higher rates summation contention for deposits.

Total operating expenses astatine Goldman roseate 11% to $8.1 cardinal successful the quarter. A root told Reuters past week that the slope would laic disconnected 3,000 employees successful an effort to rein successful costs.

Goldman Chief Financial Officer Denis Coleman said severance charges volition beryllium adjusted successful 2023.

Goldman's trading concern was a agleam spot arsenic it benefited from heightened marketplace volatility, spurred by the Federal Reserve's quantitative tightening.

Fixed income, currency and commodities trading gross was up 44% portion gross from equities trading fell 5%.

Overall nett gross was down 16% astatine $10.6 billion.

Reporting by Niket Nishant and Noor Zainab Hussain successful Bengaluru and Saeed Azhar successful New York; Additional reporting by Bansari Mayur Kamdar; Editing by Anil D'Silva, Mark Porter and Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

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