Goldman Sachs Flags Slower Q3 Growth Amid Industry Headwinds

Goldman Sachs' FICC business may experience a softer Q3 compared to its strong second quarter performance, according to Goldman's chief David Solomon. The bank's shares slumped nearly 4% after Solomon's remarks.

The decline in the FICC segment is attributed to higher transaction expenses and accelerated technology investments, which are expected to push non-compensation expenses up by $500 million. Additionally, provisions for bad debt may increase due to 'a couple of idiosyncratic things', although no specific details were provided.

Broad industry trends also indicate headwinds, with Dealogic data showing global investment banking revenue fell to $21.194 billion in the third quarter through September 15, down from $23.765 billion a year prior. Banking analyst Sean Dunlop from Morningstar Research noted that Goldman's outlook was not entirely unexpected.

'We're not particularly surprised, and had underwritten a 12% sequential decline in investment banking revenue and an 11% sequential decline in FICC revenue for Goldman in Q3,' Dunlop stated, adding that 'slightly softer' might even be more constructive than their own forecast.