Goldman Sachs (GS) heads into its fourth-quarter report before the markets open Tuesday with a newfound enthusiasm for asset management, as📖 the Wall Street giant backs away from a consumer-focused growth strategy that's saddled it with losses in t🐓he billions.

The financial firm best known for 澳洲幸运5官方开奖结果体彩网:investment banking and 澳洲幸运5官方开奖结果体彩网:proprietary trading is expected to report adjusted earnings of $5.78 per share, barely half of its EPS in the year-ago quarter, based on analyst estimates from Visible Alpha. That would be the lowest per-share result since the second quarter of 2020, amid mounting allowances for credit losses and a slump in 澳洲幸运5官方开奖结果体彩网:mergers and acquisitions (M&A), which is expected to slash Goldman's investm💞ent banking revenue in half year-over-year. Wall Street expects Goldman's overall🦩 revenue to drop 15% year-over-year for the fourth quarter to the lowest quarterly total in more than two years.

The quarterly report follows this week's layoff of some 3,200 Goldman employees, accounting for 7% of the firm's workforce. It also comes after Goldman in October embarked on its third 澳洲幸运5官方开奖结果体彩网:major reorganization in CEO David Solomon's four-year tenure, placing its wealth- and asset-management businesses in the same segment once more to underscore the company's interest in growing its fee-based income.

The more immediate effect of the latest strategy shift has been to highlight Goldman's losses from its recently curtailed push into consumer lending and banking. These amounted to $1.2 billion in the first nine months of 2022 and $3 billion since the start of 2020, the company revealed late on Thursday when it released pro forma retroactive results for its reshuffled business units.

The losses are likely to grow deeper still at the new Platform Solutions division, consisting of Goldman's credit card loans, banking transactions payments processing, and GreenSky, the specialty lender Goldman acquired near the peak of fintech company valuations in September 2021 for $2.2 billion. Goldman is likely to report a fourth-quarter Platform Solutions loss in excess of $2 billion Tuesday, Bloomberg reported this week.

"There are a variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity. We need to proceed with caution and manage our resources wisely,” Solomon wrote in a staff memo late last month warning of layoffs.

The lean times in investment banking and (for Goldman) in consumer lending raise the stakes for the results in asset management, wealth management, and proprietary trading. Trading in stocks, 澳洲幸运5官方开奖结果体彩网:fixed income, 澳洲幸运5官方开奖结果体彩网:currencies, and 澳洲幸运5官方开奖结果体彩网:commodities accounted for just over half of Goldman's revenue and 80% of its net income in the third quarter. Rival JP Morgan Chase (JPM) reported a 7% year-over-year increase in its fourth-quarter trading revenue on Friday. JP Morgan also reported a $2.3 billion provision for credit losses. It cited "a modest deterioration in the firm’s macroeconomic outlook, now reflecting a mild recession in the central case."

Goldman's share price has mostly shrugged off the bad news, outperforming the S&P 500 index with a total return of -2.7% in a year, versus -15.7% for the S&P 500. The stock was up nearly 8% in 2023 and 31% since July 14, not counting its gain of nearly 1% in Friday's midday trading.

1-Year T⛦otal Return for S&P 500 and Goldman Sachs

Goldman Sachs Key Stats

Source:

The Key Metric

Investment banking revenue consists of the fees Goldman receives for advising clients on M&A, among other transactions, and for underwriting corporate debt and equity offerings.

Goldman's advisory and equity 澳洲幸运5官方开奖结果体彩网:underwriting receipts plummeted in 2022 as a result of the bear market in stocks and the downturn in merger activity in the second half of the year. The firm's third-quarter investment banking revenue was down 57% year-over-year and off 26% from the second quarter of 2022.