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Goldman Sachs reports over $900 million in losses due to a 60% drop in profits

Bank encounters financial setbacks due to commercial real estate investments and GreenSky, resulting in the lowest net income over a three-month period in the past three years.

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Goldman incurs nearly a billion dollars in impairment charges, leading to a 60% drop in profits
Goldman incurs nearly a billion dollars in impairment charges, leading to a 60% drop in profits

Goldman Sachs reports over $900 million in losses due to a 60% drop in profits

Goldman Sachs Posts Lower Second-Quarter Earnings

Goldman Sachs, one of the world's leading investment banks, reported a significant drop in its second-quarter earnings on Wednesday. The bank's net income dropped nearly 60% year-over-year, to $1.22 billion.

The decline in earnings was accompanied by an increase in operating expenses. Goldman Sachs' operating expenses grew 12% to $8.54 billion. The investment banking revenue fell by about 20%, and the bank reported impairments totaling $994 million, including a $504 million impairment related to home-improvement lender GreenSky and another $485 million in impairments connected to real estate investments.

Despite these challenges, the bank managed to maintain its position as the leader in completed M&A deals. However, the overall industry has seen a roughly 38% decline in dealmaking so far this year.

Randy Frederick, managing director of trading and derivatives at Charles Schwab, stated that Goldman Sachs missed its second-quarter earnings target. The earnings report marked Goldman Sachs' lowest three-month profit total in three years, according to the Financial Times.

CEO David Solomon remained positive in his prepared statement on Wednesday. Despite the setbacks, he expressed confidence in the bank's ability to navigate the current economic climate. The bank is seeking a buyer for its GreenSky unit, which could potentially help offset some of the losses.

It's worth noting that Goldman Sachs has undergone three rounds of layoffs in the past year and has lost more than $3 billion since 2020, as reported in January. This has raised concerns about the bank's financial health and its ability to recover in the near future.

However, the statement from Randy Frederick suggests that Goldman's second-quarter earnings are an outlier compared to other major banks. As the global economy continues to recover from the pandemic, it remains to be seen how Goldman Sachs will fare in the coming quarters.

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