Goldman Sachs earnings on deck as CEO David Solomon feels pressure to boost profits

Goldman Sachs  (GS) - Get Free Report shares edged higher in pre-market trading ahead of the investment bank's third quarter earnings prior to the opening bell.

Analyst expected the iconic Wall Street investment bank to post a 6.6% decline in overall group revenues, which will likely come in at $11.19 billion, thanks in part to slump in overall dealmaking fees and the bank's exit from some of its consumer-focused businesses. 

Merger activity is over the first nine months of 2023 is down around 27% from last year's levels, according to Refinitiv data, with around $2 trillion in deals completed - the lowest total since 2013. Overall third quarter fees, according to Dealogic, are down 17% from last year at $15.2 billion.

Profits are likely down sharply from last year, as well, with Goldman expected to post a bottom line of $5.31 per share, although much will depend on the level of writedowns the bank executes in its commercial real estate division, as well as the amount of capital it opts to set aside to cover potential losses in the coming quarters.

Goldman will also take a 19 cents per share hit to its third quarter earnings from the sale of GreenSky, it home improvement lending unit, which wrapped-up earlier this month. 

Goldman bought the unit for $1.7 billion in 2021 and solid it to a consortium lead by private equity group Sixth Street Partners after booking a $504 million writedown over the second quarter.

CEO David Solomon, under fire from some investors over the bank's lackluster profits, said the sale was part of the bank's pivot towards banking and markets as well as its renewed focus on wealth management.

Goldman Sachs shares were marked 0.13% higher in pre-market trading to indicate an opening bell price of $314.80 each. 

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