Goldman’s chair and chief executive David Solomon said the worst of March’s banking difficulties had passed, but stressed there were still dangers ahead.
On an investor call following first quarter results, Solomon said “it appears the worst volatility is behind us thanks to prompt action from regulators.”
Solomon said the quarter was “certainly volatile”, highlighting the extreme market movements in interest rates.
“Some of the market moves were staggering,” Solomon said.
“Whenever you have volatility of that size it flows down to the capital market,” Solomon said, referring to the tremors felt after SVB’s collapse. This meant Goldman’s investment banking division recorded a “pretty muted” quarter.
While Solomon was hopeful, he warned that the effect of March’s mini-crisis would “lower growth expectations and higher risk of credit contraction.”
On the whole Solomon said Goldman “continue to be cautious on the economic environment.”
Solomon also provided updates on the bank’s ‘platform solutions’ division, which includes its payments and consumer banking businesses.
The division has seen heavy criticism as a result of the heavy costs it has incurred over the past few years. Since its initial launch in 2016, Solomon has tried to narrow Goldman’s ambition in the consumer space to payments in particular.
It recorded a $470m (£378m) hit from the partial sale of the Marcus loans portfolio as well as the transfer of the remainder of the portfolio to held for sale.
Solomon also said Goldman will put buy-now pay-later firm Greensky up for sale, telling analysts “we don’t think we’re necessarily the best owner of Greensky.” Goldman bought Greensky back in 2021.
Nevertheless, the Wall Street giant remains committed to expansion in consumer banking, saying “our number one focus is driving [the division] towards profitability.”
Just yesterday, Goldman launched a new savings product with Apple offering a market-leading interest rate, higher even than the interest rates on its Marcus platform.
Solomon said the two businesses had little overlap in customer base. He argued the business with Apple was “a way to open another deposit base. [Its] always good have another deposit stream.”
The call came after Goldman’s first quarter results. Its profit fell 18 per cent year on year as investment banking activity remained subdued.
Bank of America also announced results today, joining JP Morgan, Citi and Wells Fargo with a strong set of results boosted by higher interest rates.