Goldman Sachs Group on Tuesday unveiled a plan to re-organize its business into three units in another overhaul in less than three years.
The US bank also reported a smaller-than-expected 44% slump in third-quarter profit.
According to the Wall Street giant, it will now have three operating segments, comprising asset and wealth management, global banking and markets and platform solutions. Goldman did not give details about the executives who will lead the units.
The reshuffle came on the heels of the investment bank’s plans to boost its income from fee-based businesses at a time when rising interest rates had negatively impacted valuations and deal-making.
Commenting on the state of the economy, the firm’s business during an interview with CNBC, the Chief Executive, David Solomon, said: “It’s time to be cautious. You have to expect that there’s more volatility on the horizon now.
“That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance we have a recession in the United States,” he added.
According to news reports, the bank rounds out a mixed quarter for big US banks, in which choppy capital markets and slowing economic growth weakened investment banking.
For instance, deal making slowed in the quarter, casting a pall over some of the bank’s most lucrative businesses. But then, rising borrowing costs resulted in a 31% surge in net interest margin, which partly helped it to post a profit of $8.25 per share in the quarter ended September 30.
According to Refinitiv data, the performance beats analyst’s average estimates of $7.69. This is even as Goldman’s total revenue fell 12% to $11.98 billion in the quarter.
The bank’s investment banking revenue dropped to $1.58 billion, down 57% from last year, reflecting a decrease in M&A and equity and debt underwriting.
On jobs, Solomon said that Goldman had no further plans to downsize its workforce after a round of job cuts in September.
Commenting on the Wall Street giant’s performance, chief market strategist at B. Riley Wealth, Art Hogan, said: “The street certainly seems to view the Goldman reorg to be a positive and well thought out strategy.
“The firm plans to stitch its banking and trading business into one unit, fuse the wealth operation with its expanded asset-management business and have a smaller standalone business that focuses on embedded finance, effectively offering up Goldman’s banking services on corporate partners’ platforms”, Hogan added.
