David Solomon Acknowledges Goldman Sachs Overshot with Consumer Expansion

David Solomon, the CEO Of Goldman Sachs, Revealed to CNBC on Wednesday That the Company Had a Disappointing Quarter, Partially Due tTo Their Overly Ambitious Consumer Initiatives.

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On Wednesday at the World Economic Forum in Davos, Switzerland, Solomon spoke on CNBC's "Squawk Box" and acknowledged that the quarter had been a disappointment. He expressed that they had taken ownership of the situation. On Tuesday, the New York-based investment bank reported its most significant earnings miss in the past ten years, with revenue dropping and expenses and loan loss provisions surpassing anticipated figures.

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Goldman reported that their quarterly profit had dropped by two-thirds from the same period the year before, amounting to $1.33 billion, or $3.32 per share. This was nearly four-tenths lower than the expected consensus, making it the most significant EPS miss since October 2011, according to Refinitiv data.
Solomon acknowledged that while they had some successes in the consumer platforms, they also made some mistakes. He admitted that they may have taken on too much too quickly.

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Constructing and broadening its consumer banking operations has been more difficult than anticipated. Goldman Sachs shifted away from its original plan of creating a comprehensive digital bank, known as Marcus, in the previous year. Additionally, the Apple Card account, which was acquired in 2019, has not been as lucrative as Goldman's executives had hoped.

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Solomon expressed his satisfaction with the current state of the deposits business. He also noted that the company is making progress on their cards platform and that the collaboration with Apple is likely to be beneficial for the firm.

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According to Solomon, Goldman Sachs had a strong showing in asset management and lending when compared to other companies in the same field.
Solomon noted that their relative asset growth and the performance of their core business is quite impressive when compared to other companies. He added that they are raising a lot of money to serve their clients and that there is a lot of potential for them in the asset management business.

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The bank reported an 11% return on average tangible common shareholders' equity for 2022, which is significantly lower than Goldman's medium-term targets of 15%-17%.