Goldman Sachs further shifts focus from the main street to wall street

Goldman Sachs is set to sell its buy now, pay later (BNPL) platform - Greeensky as it seeks to shift its focus from the consumer division. Its recent moves have not been without a hit on its revenue as seen in its latest earnings report.

Goldman Sachs’ shift in focus

Greensky is part of Goldman Sachs’ Platform Solutions segment. The division also includes the company’s credit cards and transaction banking operations. At the start of 2023, the company reported a pre-tax loss of $1.2 billion for the segment in the previous year’s first three quarters.

The firm acquired Greensky in 2021 in a stock deal worth $2.24 billion. At the time of purchase,

it forecast significant growth by integrating the installment-based platform into its Marcus digital bank.

In regards to the company’s decision to shift its focus away from the consumer sector, its CEO David Solomon stated that the firm is “narrowing focus”. He added that the firm “may not be the best long-term holder of this business”.

The sale of Greensky comes after the sale of some Marcus loans. Indeed, the latter led to a $470 million loss as highlighted in Goldman Sachs’ latest earnings report. Last year, Marcus was incorporated into the firm’s asset and wealth management division.

Goldman Sachs Q1’23 earnings report

On the one hand, the firm’s decision to shift its focus from being a main street to a Wall Street bank is among the factors that impacted its revenue. To begin with, profits dropped by 18% from the previous year. Besides, revenue from its trading and investment banking divisions declined in the first quarter of 2023. Granted, its asset and wealth management sector recorded an increase in revenue.

Goldman Sachs’ revenue for the quarter was at $12.22 billion; missing analysts’ estimate of $12.76 billion and dropping by 5% from the previous year. While the banking sector was impacted by the Fed’s aggressive monetary policy and the Russia-Ukraine war in 2022, some of the other major banks reported higher revenues.

Furthermore, while its earnings per share beat economists’ expectations, other entities like JP Morgan and Bank of America reported higher profits. It should be noted that the two banks have large consumer divisions.